Posted 13/08/2020 by Patrick Leavy
Growing a business will usually boost profits, and that's quite possibly the most common goal for businesses, right? But the secret of the business growth phase is cash flow.
It's all about timing
Inevitably, you will spend first and then reap the benefits, in that order. So, your expenses can quickly outstrip your income if you're not cautious.
An example is new machinery (fixed assets). You need to start offering decent coffee in your bar, so you order a fancy barista machine. Spend first, then get the income later. Or you need a faster computer to do your developing work on, since the jobs you're doing these days are more complicated. Spend first, reap the rewards in future income.
“You must spend money to make money”.
This is true, but if you are not aware of the actual time gap between your spending and your earning then you may well run into cash flow problems.
The solution is in three steps:
There are other factors that affect your cash flow, and these have different fixes. But by starting with those three steps you’ll be well placed to deal with them.Back to Blog