Money Stress? How to avoid money holes.
Welcome to my second vlog in the series ‘A Pathway to Profit’ where I show you where to find the money holes in your business and how to reduce the stress they cause.
This week I would like to talk to you about CASH Management.
What it means and how to get it!
Firstly, what does it mean?
Cash management is:
- Understanding what money is going out of your business – your monthly costs. How much it costs each month to run your business.
- Understanding what money is coming into your business, from customers, from affiliates, from 3rd party contracts – when is the money going to hit your bank?
- Understanding what is missing! Where are the holes, when are happening and how are you going to fill them in.
Cash management is the difference between, becoming aware of a hole in your finances today that needs to be filled tomorrow and seeing a potential hole six months out.
One causes you huge amount of stress and the other gives you time to do something about it!
So how do you get it?
Step 1: Track the Cash: We always remember the big stuff. We remember the monthly payment into our mastermind groups, we sometimes forget the pens we bought or the parking we paid for on a client visit.
If we have a tendency to overspend or be blasé about money in our personal life, this will flow into your business. I suggest you have a notebook or app you carry with you or have easy access to and track both your personal and business spending.
Only when you know what you are spending will you be able to understand it.
Step 2: Create a process in your business that you follow to keep control of your spending. If you haven’t already, check out my first vlog in the series where I talk about getting organised. This is a very important step in the process. There is no judgement here, don’t berate yourself for what you have done in the past, this is a new day for a new process.
For those of you that have your process, are you keeping it updated regularly? Set aside one hour a week (if it takes less, you can have the remaining time to your self – it should never take more) to keep on top of your process as this leads into:
Step 3: Make sure you take time to review. Take a few minutes at the end of the hour and look at what you have done and check to see if you have any emerging patterns. You may notice the same invoices coming up at the same time each month – brilliant you know what to expect next month. Look to see if all of your expenses were paid, did all of your customers pay you? Often we think things are happening automatically but we need to check, make sure things have happened the way you expected.
Rinse & Repeat.