‍Transform Your Finances Now: How Budgeting and Cashflow Clarity Can Help Your Business Succeed

Budgeting is a dirty word.  It brings up connotations of going without, feeling restrictive with spending and always saying no, even to things you want.

But contrary to popular belief budgeting is more than being restrictive and saying no, it's about determining what's important, and using the money you have to make sure you spend that money in a way that's right for you.

You can't copy someone else's budget.  Whether it's for your business or your personal finances, your budget is yours.  And if you don't have a budget, then you can get off track quite quickly.

Let's use driving through the city as an example.

If you have a rough idea that you need to go from Point A to Point B, you will know roughly what direction to point the vehicle and drive, you might make a few wrong turns, and spend a bit more on fuel and time to get there, but at least you are heading in the right direction, and know where you are supposed to go.  This is what a budget should be.  Things rarely go to your budget.  The timing of invoices and payments change, as you are subject to people buying from you on their terms, not yours.  It's all about keeping your eye on where you are heading.

But what if you don't know where you are or which roads to take? If you're unsure because you don't know what's available, how can you commit to a new opportunity? And if you can't say what money you have available right now, how can you decide whether to commit or say no, that's not the direction you need to take right now?

Most business owners know how much money is in their bank account.  We carry around our phones and can look at the balances on an hourly basis, waiting for the money to come in so that we can pay out some bills and get suppliers or the tax man off our back.  We generally have a rough idea of where we are right now, at this minute, but not what's coming up around the corner.  How many times have you been surprised by a tax bill?  Having a better understanding of the next few months worth of costs, taxes, wages and will definitely make a difference to how you view your finances on a regular basis.

To conquer budgeting, I use a cashflow forecasting program called the Profit First Prophet. As a certified Profit First Professional, I was among the first to adopt the program and see its benefits for my business. I love introducing it to clients, giving them the clarity and peace of mind that they don't need to worry about finances daily. It’s not available on the open market; you must access it through a Profit First Professional, as it is based on the Profit First system.

Cashflow is a long-term game for businesses. Making decisions about whether to pay annually for a discount or monthly is now obvious—the numbers don't lie. I'm rarely surprised by a bill. It might be a few thousand dollars different from what I expected, but it's accounted for in the program, so some part of it was anticipated.

Now, finances are only a weekly thing.  All our bills are paid on Wednesdays, and we have a clear understanding of what money's due in and out and what it's allocated for.  As a business owner, I am now cool and calm, especially in our less busy times of the year, because we have worked hard to create buffers that mean that we always have enough money.  Every single year before this year, I would panic because of the reduced sales in Feb - May, but not any more.

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