cash flow planning for business Archives | Numbers Knowhow

Have A Successful Business

Mahmood Reza — Fri, 26 Jan 2024 11:03:32 +0000

What does having a successful business mean to you? That is a really important question to ask yourself when starting out. This quote below sums it up rather nicely. “If you don’t know where you are going, you’ll end up somewhere else.” – Yogi Berra And really, if you don’t know where you want to go, it is much more likely that your course will have many twists and turns. Not to mention, that it will be a bumpy ride. On top of that, it will be difficult to figure out how to reach success. As we know, you’ve got to start with your ‘why’ and you’ve got to set smart goals. But more on that later. It’s important to stress that business growth doesn’t just happen organically – it takes time, effort, and commitment. In other words, it always starts with a plan. Certainly, most people want to make a mark and have an impact with their business. And whatever your company’s remit, be it private gain or public benefit, to have a meaningful effect on your clients and yourself, it needs to make money. Only with money can it grow and scale and have the impact you […]

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Overtrading: Spot It And Fix It

Mahmood Reza — Fri, 27 Oct 2023 08:25:48 +0000

Are you looking to grow your business? If so, then it’s important that you don’t overtrade. Overtrading is a very common problem for businesses. Furthermore, it can lead to financial failure even if you’re making profits in your business. That situation, folks, is known as overtrading and that’s the theme of my video today. So let’s get started on our journey together on avoiding overtrading in your own business. Let me introduce myself first of all – my name is Mahmood and I am an accountant who works with lots of small businesses just like yours every day helping them improve their profitability through better cash management practices such as understanding their true cost base so they can make more accurate pricing decisions for their products or services which leads directly onto improved gross profit margins which means higher net profits at year end for them too! One thing I see often is clients struggling financially because they’ve been trading beyond their means because they want growth now rather than waiting. Have you ever wondered how to spot and fix overtrading? If so, then this video is for you. Over the next few minutes, I’m going to show you how […]

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Manage Cashflow: Five Top Tips

Mahmood Reza — Mon, 21 Aug 2023 09:04:28 +0000

Wondering how to manage your cashflow? You’ve come to the right place. By the end of this blog, you’ll have read about top tips to manage your cashflow and you will be equipped with the necessary information to help you do a really good job at it. Cash and business But firstly, what is cash? It’s what gets paid into your bank account. It’s factual, and more importantly, is the lifeblood of your business. Secondly, why do we need cash? Your business needs it for a whole bunch of things. Typically, cash is needed for: So running out of cash, access to cash or poor cash flow is squeaky bum time. Your business will survive if your cash flow supports it. However, if you do a bad job at managing your cashflow, the cash will run out, or access to it will dry up. Unfortunately, it is the end of the business road if you reach that point. It’s not for nothing that the phrase “Revenue is vanity, profit is sanity, and cash is reality”, rings true. It’s good business practice to have a good cash flow management strategy. Here are the five key elements that you should include […]

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What Is Operating Profit?

Mahmood Reza — Fri, 28 Apr 2023 10:13:25 +0000

Business is all about making a profit, isn’t it? But in accounting, there are several terms used to express different kinds of profit. Ultimately, what should interest you is your operating profit. There are multiple names for operating profit. You might hear people refer to it as EBIT which is the acronym for earnings before interest and tax. It can also be called PBIT which stands for profit before interest and tax. Another name for it is net profit. Definition Operating profit is the profit you make after you’ve deducted your costs for making the goods you sell and also the costs for running your business. Furthermore, it’s your total revenue minus costs of sales along with operating costs. How to calculate operating profit The easiest way to show you how to calculate your operating profit is to use an example. That way you can translate it to your business and make your own calculations. Let’s take an artist as our example. Say you’re an independent artist who sells their art and you’ve got your own company. The moment you sell a piece, you’ve made revenue. As per our definition of operating profit, you now need to deduct the costs for creating that artwork. […]

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Decision Making Under Uncertainty

Mahmood Reza — Fri, 14 Apr 2023 09:10:10 +0000

Decision making when things are calm is not the same as decision making under uncertainty. Because when it’s business as usual, you pretty much just follow the strategy laid out in your business plan, and take action that you’ve planned out beforehand. But let’s face it, although every business goes through periods when things are running like clockwork, there will certainly be times that will be challenging. This, by the way, is part an parcel of running a business. And the challenges will come in different shapes and sizes. For example, not knowing if we’re going to keep certain clients, changes in costs due to prices going up, etc. It is those things that will take unpredictability or uncertainty a notch higher. As a result, we will feel the anxiety kicking in. However, regardless of the situation, in business it’s essential to make decisions quickly and efficiently. In this video, I go through the steps you need to take to make rational decisions when everything is going crazy around you. Here’s a summary of them: Stay calm, or become calmer Going back to the anxiety I mentioned above, it is vital to try to stay as calm as possible. […]

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Cashflow Forecast Guide

Mahmood Reza — Tue, 11 Apr 2023 10:46:34 +0000

Building your cashflow forecast might seem unnecessary to some – at a first glance, that is. That’s why, this cashflow forecast guide aims to explain why you need one and how to build it. Because, you might be thinking, “I don’t need one of those. I’m not going out of business!” But if you’re like most people, your business is constantly changing and growing. And when it does change or grow, that’s the perfect time for a new forecast! It doesn’t matter what kind of business you have – retail store, restaurant, consulting firm – forecasts are important because they help keep your finances in order and on track. Why you need a cashflow forecast This cashflow forecast guide undoubtedly needs to start with the reasons why a cashflow forecast is your greatest ally. Firstly, it will help you make sure that everything is running smoothly with your money. If something happens unexpectedly (like an unexpected expense), then at least you’ll know about it ahead of time so that you can plan accordingly. Forecasts also give businesses a chance to see where their money is coming from and where it’s going; this helps them figure out ways to make […]

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Cashflow Forecast DIY (with Microsoft Excel)

Mahmood Reza — Tue, 11 Apr 2023 10:38:06 +0000

A DIY cashflow forecast in Microsoft Excel. Sound interesting? Then read on: Perhaps not because you aren’t as comfortable dealing with numbers. But, this blog (and vlog) is here to show you that it isn’t scary at all. Especially when someone guides you every step of the way. So, if you want to learn how to create one such document containing your cashflow forecast, you’ve come to the right place. Let me start by saying that making your own cashflow forecast is easy with Microsoft Excel. You can use it for any business, big or small. And feel more at ease because you’ll be able to see where your business is heading. If you’re using Google Sheets or anything equivalent, then don’t worry! The principles, approaches and formulae will apply as equally with those other packages. I’ll show you how to build a budget from scratch by using the building block approach. We’ll also deal with sales taxes, loans and credit. What’s more, you’ll save time in the process! It’s a common problem for small businesses not to know how much money they’re going to make i.e. not have a cashflow forecast. This can be stressful, and it might […]

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Undercapitalization In Business

Mahmood Reza — Tue, 11 Apr 2023 10:35:48 +0000

How to avoid undercapitalization and what it is, is the topic of this video and blog. It’s when the company hits a financial brick wall. But, let’s take a more step-by-step approach and explain everything so it’s easy to understand. In this blog (and vlog), you will find out the following: Undercapitalization To put it simply, it’s when a company runs out of money. The term describes a state in which a company does not have enough capital to perform its day-to-day business operations. In other words, it is a shortage of funds for the business which, in turn, cannot afford to cover what it spends. What’s more, it may also lead to the company being unable to pay its creditors. If you’re keen on watching videos, then click on it to learn something useful which could save your company from making some common mistakes and risk undercapitalization. If not, then scroll down and continue reading the blog. Why does undercapitalization happen? The reason why so many small businesses fail due to this issue is because they have a false sense of security in their own abilities. They think that because they are a good worker or a good […]

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How To Make Financial Projections

Mahmood Reza — Tue, 11 Apr 2023 08:41:08 +0000

Do you want to find out how to make financial projections and how to do it realistically? Here’s an easy-to-understand guide about making financial projections. A financial projection – meaning A financial projection is a forecast of the revenue and expenses that you expect for your business for a given period of time in the future. It usually contains predictions of several outcomes within. So, you can make a projection for your business in the case of sales or certain costs increasing/decreasing. In a sense, it gives you a plan B, and C… It doesn’t necessarily mean that it will pan out. Despite lacking accuracy, as it is a projection, it’s still a necessary part of business planning and development that you need to do each year. The reason being that it helps tremendously to set your business on the right path. And what it also does is it prepares you for the future. So, how do you actually make financial projections for your business? Let’s have a look. Part 1: Forecast sales What’s probably the most exciting part of it is projecting your sales. This is usually the first step in the process, too. Forecasting sales for existing […]

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Cash Flow Management Benefits

Mahmood Reza — Sun, 04 Sep 2022 18:26:23 +0000

Running a business is a multi-layered venture. It involves exciting things like creating your services/products, offers, social media content, etc. But it also includes looking after the finances – managing your cash flow. Once that is covered you can enjoy the benefits of cash flow management and easily navigate the day-to-day business ops. What does Cash Flow Management mean? It’s essentially tracking the money in your business or rather monitoring cash coming into your business (generated income from sales), as well as cash that is being spent (e.g. salaries, bills, inventory, etc). Cash flow management is what will give you a good insight into revenue versus costs. Benefits of Cash Flow Management Managing your cash flow will give you a bird’s eye view of all your business activities. It will enable you to really grasp how your business is doing. And there are so many benefits of cash flow management. So, let’s take a look at how it can help you run your business effectively and support you on your entrepreneurship journey. 1. Make effective predictions for your business When you’re on top of where every single penny goes in and out of your business, you’re sure you’ve established […]

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Why Is Cash Flow Planning For Business Important?

Mahmood Reza — Thu, 07 Jul 2022 21:46:27 +0000

Cash flow forecasts or cash flow planning for startup businesses, for example, has to do with estimating or forecasting your likely future sales and expenses. But why is cash flow for business important? Well, cash flow planning, no matter what kind of business you’re running, is an absolutely vital business tool as it indicates whether you have enough cash to sustain your business and grow it. Even a simple cash flow forecast template in Excel can easily show whether more cash is going out of the business than coming into it. Why Is Cash Flow Planning for Business important? Using the example above, a cash flow forecast allows businesses to track the estimated or expected cash movements over a specific timeframe in the future. However, it pays to understand that a business’s profit at any given month end is not a true reflection of how much money is coming into it as revenue. How do you get a proper cash flow forecast. Well, use paper, spreadsheet or have your accountant it for you!. Using Numbers Know How makes it possible to estimate the amount of ‘money in hand’ you have at any moment in time. Similarly, if you take into […]

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The Advantages Of A Cash Flow Forecast

maishedu — Sat, 04 Jun 2022 19:57:05 +0000

There’s no denying that running a business requires you to keep your finger on the pulse. Take your eye off the ball and you’ll soon find that you start to lose a grip on what matters. However, many people struggle to keep control of everything when running their businesses. Essentially, it can feel as though you are always chasing your tail and getting nowhere. This is the reason why it is important to assess the finances of your business. You’ll have greater control, a balanced view and you can reach for the skies when growing your business organically. If you have heard of a Cash Flow Forecast, you might think that it is another piece of jargon that means nothing. Additionally, you might think that you simply don’t have the capacity to tackle another process within your business. However, now is the time to recognise the importance of a cash flow forecast. Are you prepared to learn even more about your business? If so, Let’s take a look at the Advantages of a Cash Flow Forecast. Prepare For Future Cash Shortages It’s important to understand both negative and positive cash flow. This is vital as you’ll need to prepare […]

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