Have you ever been concerned about cash flow in your business? Maybe you need to generate more revenue or more likely you need to become more efficient with expenses. Chris Miles, the “Cash Flow Expert,” is a leading authority on how to create cash flow and build lasting wealth. Chris shares his insights on how to achieve financial prosperity and spend more time doing what you love.
Cash flow in your business can be related to the blood flow in your body. Without blood flow in your body, you will die, without cash flow, your business will die as well. When I talk about cash flow I’m not just talking about revenue but real profit that hits the bottom line. When you have more profit you have more options which give you more freedom.
When it comes to solving your cash flow problems we look at both sides of the coin, increasing revenue and becoming more efficient with expenses. While COVID has been hard on everyone it also gave many businesses a chance to review their expenses more carefully. It sounds a little funny to say but many businesses will come out of COVID stronger because they became more efficient with their expenses.
The best way to understand your numbers is to start tracking them regularly. What sources are generating revenue and are there any opportunities to grow revenue in those areas. Then consider the Pareto principle and focus your efforts on those areas of your business that are driving 80 percent or more of your revenue.
There are several tools out there that can help you track what is going on in your business. Quickbooks or Xero are great accounting tools you can use to help you manage and run your business. If you are a tiny business a simple spreadsheet might be all you need today and as you scale you can adopt more advanced tools. Eventually, you will want to use dashboards, reports, or lead tracking software to help you better understand what is going on in your business.
Most accountants are passive accountants they wait for you to provide them the numbers and receipts during the tax season and they just file your taxes. What you need to find is an accountant that is actively involved throughout the year to help you with strategies that will maximize your tax savings. One strategy that is prevalent today is the Augusta Rule that allows a homeowner to rent out their home for up to 14 days per year without having to pay any taxes on that income.
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