This article (part 2 of 3) was contributed by Shantel Susan-Haines, the founder of Shantel's Money Guidance.
Continuing on from Part 1 . . .
Creating Your Flexible Business Money Plan
A simple, flexible plan for your creative business money will always help you to monitor what you plan vs. what actually occurs with your business money inflows and outflows.
What is a Flexible Business Money Plan?
Flexible business money plans are often used for companies that tend to have swings in their sales and hence cost of sales from period-to-period. As an artistic-creative company, you will notice wide variations, especially on the revenue side. Therefore, planning the cost of sales and the revenues the business expects to generate, along with the expenses the business will require is designed to be a bit more flexible than the standard “budget.” You will feel in control of your creative business money when you have this money plan in place.
Clarifying Your Average Monthly Money Outflows
Another part of using your income statement to its best effect is to know how to look at your creative money outflows and to monitor its flow out of your business. This is so important to your making some of the best determinations that you can about HOW you spend your money and turn it around to further develop your artistic work.
Don't let this become a problem for you - learn how to continue to financially support your creative expressions, through knowing how to monitor the money that flows out of your business every month and help yourself to make optimal pricing decisions.
This can also be helpful if you wish to project money outflows for a specific project using this same technique.
Achieving Harmony with Your Cash Flows
Managing cash, better known as cash flow management, is a challenge for many entrepreneurs.
If you can’t have the amount of ready cash available to pay your current expenses – you will go out-of-business and sadly, many businesses have.
There is much talk about this topic and while it is important, it doesn't need to be overdone. The "why" and "how" of managing/handling your cash flow really only involves a few simple actions that should be taken on a consistent basis to be their most effective and a few good practices and habits can make all the difference to your business.
Some of the common oversights about cash flow include:
1. If you have lots of sales – the cash will follow.
2. Suppliers will wait to be paid when I have the cash.
3. All clients pay on time and in full.
4. Billing clients can happen when I have a chance.
5. There is no need to negotiate payment terms with clients and vendors.
The above demonstrates some of the wrong assumptions that business owners often make when it comes to dealing with cash flow. However there are practices to make your cash flow easier to manage to relieve these burdens.
Next Time Part 3 . . .
Shantel Susan-Haines, Founder
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