Last week, I taught you how to set up a money management system for your business so you can always be aware of how much money you have in each essential bucket of your business. When you can see how much money you actually have, you’ll be acutely aware of when you’re having a tight cash month vs. an abundant cash month. In this episode, I’m showing you the exact steps to take when money is tight versus what to do when the dough is rolling in. No matter what your current cash flow situation is, this episode is for you!
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Some key takeaways on keeping steady during the ups and downs of cash flow:
In months where cash flow is really tight, evaluate why that might be the case. Was revenue down this month? Were there unexpected business expenses? Are you pulling personal expenses from your business account? Understanding what’s causing low cash flow helps you create a plan to prevent it in the future.
On the flip side, when you have a super abundant month of high sales, also evaluate how that happened. Was it a new marketing strategy? A program launch? Did a new client pay in full? Evaluate which pieces can be repeated next month versus what might be a one time or bi-annual occurrence.
Abundant months are the perfect time to make sure you have a cash cushion saved for tighter months (at least 2-3 months of expenses), and to set aside savings for your next investment. Don’t forget to set aside money for taxes - abundant months mean profit to report, which means taxes will be due on that profit!
I’m Sarah Young - a CPA, Virtual CFO, and the Owner of Young + Co! I have over a decade of experience in helping entrepreneurs scale their businesses and build wealth at the 6- and 7-figure levels, and I started the Profit + Prosper podcast to help you do the same. Profit + Prosper is a business finance podcast created to help entrepreneurs build their wealth in a way that’s fun and empowering. This is NOT a boring numbers podcast - I will share tactical tips to increase your profit so you can truly prosper in your business and in life. I hope you’ll subscribe so we can Profit + Prosper together!