When you’re getting ready to take a vacation, the first thing you do is contact your travel agent to help you plan the vacation. Or, you read brochures, contact friends for ideas, make transportation plans, book hotels and start selecting sights to see. A major effort is spent on planning for this special time.
But when it comes to your business, do you spend the time to plan for profitability and cash flow? It is interesting how individuals will plan and prepare for their vacation but how little time is spent planning for the rest of the year? Why not? Too difficult? Too abstract? Crystal ball gazing? There are many reasons not to plan but planning is an absolute necessity in these very difficult times. Especially planning of cash flow.
Would you like to know how much cash you’ll have in the bank at the end of each month for the next 12 months. Who wouldn’t? It’s easy to find out, just develop a cash flow forecast that makes sense.
Cash flow forecasting is one of the most important forms of business planning. Cash flow is a business’s backbone; without the cash, a business would not be able to survive and grow. It is extremely important for a business to know where their cash is going and to use this precious resource efficiently. By developing a cash flow forecast you will have the answer to the most important questions: How much cash will I need and when will I need it?
When a business has financial problems, the fix may not always be about the need for more sales. If there is a possible way to foresee the future, then why not use it to your business’s advantage? By forecasting your business’s cash flow and by using this information as a tool, your chances for success will greatly increase.
You don’t want to be on vacation in Hawaii without your swimsuit, sunscreen and hotel reservations—and the same goes for a business. You must be prepared for any situation that may arise.
Have a great rest-of-the-week.
Harvey A. Goldstein, CPA
1-800-873-7789 x1233
harvey@gohagit.com
www.gohagit.com | www.cashplan.com | www.hgoldsteincpa.com
Next week: how to use a cash flow forecast to manage the business.
