5 Reasons Why Cash Management is Key for Business Growth
Summary: As a woman entrepreneur, you know cash is queen but managing it can also be challenging. This is difficult because cash management is an integral part of growing your business. There are so many different cash management strategies out there to choose from - how do you know which one is right for you?
That's why I've created this video for you...to help women entrepreneurs like yourself better manage their finances and grow their businesses faster than ever before!
Here are 5 reasons why cash management is key for business growth and keeps your business running smoothly with minimum stress.
As a woman entrepreneur, you likely know that cash is queen, but when it comes to fueling your business growth, did you know what the most important thing is to make all of that possible?
We're going to give you five reasons why your cash management strategies are critical to funding and fueling your business growth. But, before we dive into these strategies, I want to lay some groundwork.
You DO NOT need to be a numbers person.
You DO NOT need to have an accountant background.
And perhaps the most important thing to remember is that...
Growth devours cash, but scalability produces cash.
When I first started my business, I did not feel confident in managing the money in my business because I did not understand how money behaves. What I have learned over time is that growth and scalability are both pivotal, and you will consistently bounce back and forth between both of them throughout your entrepreneurial journey. You have to learn to understand what's happening to your money in your business when you're in one of those two stages.
5 Reasons Why Cash Management is So Pivotal and The Key to Your Business Growth
1. You make better, more strategic decisions.
Who likes surprises when it comes to the cash flow in your business? The answer is easy - no one. Surprises often lead you scrambling for solutions, which means you are reacting and often having to settle or make compromises you didn’t intend to make.
When you have your cash management strategy in place, you start making smarter, more strategic business decisions that will help skyrocket your business.
A cash management strategy can include putting together a predictive cash flow that helps you keep track of where your cash flow is today, and the growth plan you want to implement. The tool we use with our clients has a nifty calendar view, automatically updates balances in real time. It is incredibly helpful to plan out potential cash needs and see what happens to the cash flow next month or even next year.
We then look for the danger zones where the cash flow gets too low for comfort and make adjustments to keep the cash in a healthier range. Imagine that - a way to be confident and strategic about your cash flow to grow.
When you are strategic about investing in your business, whether in marketing, your team, mentors, or overall expansion, you make better decisions that happen every day. You now have the luxury of thinking through and preparing for the upside and downside.
2. Confidence and financial stability is attractive.
Have you ever been in a position where you were desperate for a client, and you went to the table with that desperation in your voice?
Most likely, you didn't get the client. Or worse, you got the client and it was the worst possible experience ever. Now imagine interviewing the same client with the confidence to walk away from the potential if it isn’t a good fit.
When you have a cash management strategy, you will automatically start to be more financially stable, and things start changing–
Confidence and financial stability are attractive and have the added benefit of attracting and retaining new clients and teams. Everybody wants to be on a winning team because they want that same stability and security you're looking for yourself. Don’t be surprised if you need a mentor to make this happen. You are an expert at what you do, just not an expert in everything you do. Bring in a mentor that can help you align your personal goals with your business goals and help you get to that point of financial stability.
3. You become attractive to new funding sources.
Bigger business growth means you need some funding to help with that. Finding that funding is an important skill, right? If you don't have good cash management practices in your business, you're less attractive to lenders and funding.
There's a saying in the business financial services world, which is, “The best time to ask for money is when you don't need it.” So when my client has bigger goals like buying a commercial building or buying out competitors, we focus on building the cash management strategies to support that for the business.
Unfortunately, people often don't think about this ahead of time. As a result, they will request lending and get denied, which is discouraging. We don't want that for you, so you need to start putting things like cash management strategies to work for your business.
4. You sleep better at night.
Are you worried about paying for payroll or marketing technology? We often say that when you grow, the list in your business, what needs attending to also grows in your business. So is your never-ending list what's keeping you up at night?
More times than not, when you have cash management strategies put to work in your business, you will have the ability to sleep peacefully at night. I have had many clients come back to me and say they worry less since implementing the cash management strategies. They know if an event arises that they have a plan of attack to fix it, so their days of scrambling are long gone.
You may not be happy about needing to address every problem, but having a business that can financially handle it will be less stressful. That is worth its weight in gold, and you can make this happen– you can transform your cash in your business, and it’s well worth it.
5. It takes time to see a return on your investment.
Aggressive growth and scalability goals do not happen overnight. For the simplest strategies, you may only need 90 days for the grow strategy to produce cash. Yet, if you are a more mature business with more complex strategies - it could take 18 to 24 months or more. Do you have the time to wait? It is tempting to think that you’ll see results fast, but reality proves that it often takes more time than you think.
With good cash management practices, you can make bold moves and allow them to mature.
This is a new way of thinking, it involves new habits and for those reasons, implementing cash management changes takes some time to feel natural and to show their full benefit.
Resist the urge to quit the new practice too soon. I had one client who wanted to quit in the second month. After encouraging her to hang in there and trust the process, we exceeded her cash goals by month six, transforming the business.
Your strategies need time to mature. If you're constantly flipping from strategy to strategy because you don't have the time and you're desperate to get cash, you're going to be cutting off your nose to spite your face.
Cash management gives you the time to allow your strategies to bear fruit. These are five reasons you need cash management, and you don't need a finance or accounting background. However, you do need to be able to make smart decisions. If you need help with that, or you need more tips and strategies on growing and scaling your business profitably and sustainably, let’s schedule a time to chat about growing your business. Click here to schedule a time!