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It has been a turbulent few months, and your bank account likely reflects that. Now is the time to really look at your numbers so you can accurately manage your money.
The first step is to know and project your cash flow. If you do not have accounting software, use a simple spreadsheet to capture income and expense. Knowing the inflows and outflows of your cash is the first tool you will need.
Calculate your break even point. Know how much you need in sales to cover your expenses and to make a profit. Changes in fixed expenses and your gross margin will affect your break even point, so tracking these numbers regularly is important.
Take a thorough look at your expenses. Now is the time to trim the “maybes” and “nice-to-haves”. When possible, delay expenses versus cutting them completely. Expenses that generate revenue should not be cut – you still need marketing to generate sales.
It may be time to evaluate your team. This is probably the most painful, yet the most crucial step to take. You can no longer afford the third string players. There are a lot of hard-working, talented people looking for employment. If you have a critical role, get a top producer to fill it.
Review your operating budget with your team so you can be ready to make adjustments. Those changes will never be easy, so get input and buy-in now from key stakeholders.
Look at your payables and receivables. Know the status of what you owe, and who/how much is owed to you. Contact your vendors and customers letting them know you want to work together. Be sure to document all communication specifically noting when you spoke and any agreed upon dates for payments.
Managing your money is crucial right now. You cannot manage what you do not measure. We are still facing a lot of uncertainty, so having a plan will allow you to make rational decisions, not have panicked reactions. If you need help, contact your Coach and take Action!
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