Cash Flow Forecasting

Matrix Key:  Financial Viability - Profitability - Projections and Plans

“Cash Is King.”

Few components of the WholeLife Matrix carry as much weight as profitability.  For many people, profit has negative connotations.  But without profit, you don't have a business. Cash flow forecasting is essential to the success of every business, and should include the following:

1. A schedule of receipts and disbursements
2. Liquidity measurements
3. “What if” scenarios
4. Accounts Receivable to Cash projections

Here’s the bottom line…if your business runs out of cash, you are out of business.  You need cash to pay vendors.  If you don’t pay them, they will stop selling to you.  You need cash to pay employees.  Few employees are willing to volunteer their time.  You need cash to pay off debt.  Banks are picky about being re-paid.  Cash is King.

You must monitor your cash flow at all times.  How quickly will your Accounts Receivable convert to cash?  What if your customers pay you three months late?  What is your percentage of cash to inventory?  A close look into all of these questions is worth your time and effort.  A little planning now will keep the wolf from the door later and will keep you on a winning path.

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Projections and Plans

Matrix Key:  Financial Viability - Profitability - Projections and Plans

"Failure to plan is planning to fail." - Unknown

We've devoted a major quadrant of the WholeLife Matrix to the practice of Projections and Plans.  Most good entrepreneurs know that planning is essential to success.  It's easy to let planning drop down the priority list though, when the day to day responsibilities of a growing business become more time consuming.  Here's the thing...without consistent, good projections and plans, your business is being run by the circumstances.  That's like the tail wagging the dog.

The four principles of good Projections and Plans are:

1.      A reliable Cash Flow Forecast

2.      A reliable Sales Forecast

3.      A projection for your Sales/Expenses/Profit

4.      A System to Review and Adjust all of these projections and forecasts

Don't let the market determine where your business will end up.  There are too many easy and efficient tools you can use to stay out in front of your company's performance.  Use your own ideas as your guide and head down your chosen path.

Are You Ready to Win?