Establishing healthy cash flow is crucial to all businesses. To just be making a profit month over month may not be enough to execute proactive strategies.
These past few years coming out of the Pandemic have been like none I’ve seen before. Most of my clients received “free” money with the PPP loans. Took on low interest debt with the EIDL loans that brought in unprecedented amounts of cash than most business owners have seen than in previous years by just being profitable. And yet, many are still struggling with cash flow and low bank balances each month.
I had 3 BIG WINS with my clients in 2023. All hired me during 2020 at the beginning of the Pandemic. All these owners were struggling with cash flow and had some if not a lot of debt. It takes a lot of discipline and coaching for an owner to lift their heels to change money habits that were keeping them stuck:
- One business sold in 2023 for top line gross revenues and was acquired by a larger business.
- Another business took an offer at the end of 2023 to be sold and will close in 2024.
- My biggest success story is my young client that worked very diligently and maintained focus and held true to our financial priorities that produced year-over-year growth. From approximately $750K in sales in 2020 to $2.44M in sales in 2023! Not only is that a stunning metric. But the business ended with a huge net profit; cash reserves north of $350K (125% increase from the year before), and no business or credit card debt or business loans.
Now is the time to understand cash flow, change some of those money habits, and educate yourself on how to understand your financials from a CEO’s perspective, different than your CPA’s. Here are my top 5 money habits to work on in 2024.
- Being complacent with the financials. I strongly encourage you to take “ownership” of your financials by educating yourself on how to read your Profit and Loss, Balance Sheet, Accounts Receivable Report and Accounts Payable Report monthly. Does your bookkeeper print out these monthly reports and review them with you?
- Relying only on your CPA. A CPA is focused on taxes, not maximizing net profits, and optimizing cash flow. This takes proactive strategies monthly; not on a yearly basis to build up cash reserves and maximize profitability. Will you be surprised with how much taxes you may owe in April?
- Trying to do it yourself. Many business owners try and tackle their financial situation alone with the notion that they’re saving money. Are you an expert in cash flow projections? Do you have the discipline to ensure your financials are always current? Do you know how to do a monthly budget in a proactive cash flow forecasting arena?
- Management of Expenses: Just because you want it, doesn’t mean you should buy it! Are you spending more money than is coming in each month? Are you using your business bank account as a personal spending account? Do you have the discipline and know how to manage a monthly budget?
- Debt Servicing: If you are servicing credit card debt, car loans, business loans, I strongly encourage you to take a breath and stop the bleeding! Can you identify and create a strategy for what expenses should be reduced to eliminate credit card debt?
2024 Financial Resolution? Some people say it takes 21 to 45 days to break a habit. I would like to suggest that you consider adding a subject matter expert to help bring the discipline, strategies, conversations, and education to help you transform your financial arena. Don’t take things for granted.
My cash flow modeling and consulting will accomplish:
- Taking control of your financials.
- You will learn the importance of reading a Balance Sheet along with your Profit and Loss.
- Creating a monthly budget that will be tied to cash flow projections 8 months into the future.
- You will learn what your monthly outflow of cash is against your monthly inflow of cash revenues showing you a positive or negative action against your cash reserves.
- Creating an accounts receivable process will bring in more money faster and build up cash reserves.
- Creating an accounts payable process that includes debt servicing that will keep more money in your bank account; helping to build up cash reserves.
Centennial Revenue Management remains dedicated to providing you with valuable insights, tips, and strategies to empower your financial arena.
See how far an expert can take you!
Schedule your complimentary consultation today by calling (303) 901-4823