Regardless of your business model, your profitability or the number of investors you have interested in your business and the number of potential clients, your business cannot survive if you can’t manage your cash flow. So even if you are a great manager, entrepreneur or salesperson, you need to ensure that you can effectively manage your cash flow in order to ensure that your business runs smoothly. As such, our experts have suggested the most common cash flow mistakes that small businesses make in order to ensure that you don’t repeat them.
1. Overestimating future revenue
It’s true that optimism is a trait of entrepreneurs, and while a positive outlook is good for the most part, it can be dangerous when estimating future revenue and sales volume. Ensure that you are using official quantitative forecasting models rather than your own formulae to forecast future sales, so that your figures will be more accurate and precise.
2. Spending on impulse
While it is often the case that it takes initial investment for future growth, it is important to budget for all of your purchases. Buying or investing on impulse can affect your cash flow, and may lead to extreme overspending if you engage in impulse buying all the time. Instead, create a budget and stick to it all the time.
3. Keep some reserve money
When running a business there are a number of things that could go wrong at any time. Whether there is a burst pipe in your office, or your vehicle breaks down, you should always have some money set in reserve for emergencies such as these to minimise your downtime.
4. Consider finance lease
Instead of buying equipment outright, in many cases, a better solution can be to finance lease the equipment. Not only does this allow you to more effectively manage your cash flow by not having a significant outlay, it also means that you won’t be subject to capital depreciation and will get a better deal in terms of tax.
Cash flow mistakes made by small business owners – where to find out more
At Tower Leasing, we assist companies looking to secure assets and equipment through a finance lease, and we help industries across the board with alternative funding and leasing solutions. By working closely with our clients, we offer bespoke and tailored solutions, helping all clients maximise their cash flow. For more information about the services we provide, please contact us.
Or click here to read about the alternative sources of finance we can help you with.