02.08.2006: Cashflow Tips
#1 Overestimating future sales volumes
Relentless optimism is a key trait of successful entrepreneurs. After all, what realistic person would persevere in the face of so many obstacles, so many naysayers and so much stress? But while optimism is critical for a new business owner, letting it compromise your objectivity can be dangerous to your cashflow.
Unfortunately, not every interested looker will actually make a purchase. While your sales volumes may increase over the holidays, expecting them to double is a little unrealistic.
That's why it's so important to complete objective and realistic sales forecasting based on historical evidence and real numbers. By applying quantitative forecasting methods, you can use actual past revenue data from your own business or other businesses in your industry as a basis for tracking trends and predicting future sales. This information, along with some objective intuition, will help you come up with more realistic future sales projections.
Revenue forecasting can be especially difficult in your first few years of business because you don't have past sales figures or as much experience to draw from. This is where working with a mentor from within your own industry may be extremely useful. A good business mentor can offer his or her own experience to help you project future sales, and even offer historical sales figures from personal experience to help you predict upcoming sales volumes.
No matter which method you select, make sure to base your future sales expectations on objective facts and sound judgment. This will save you from overspending based on pipe dreams that may never come true.
08.06.2006: Business Finance Tips
#4 Stay organised and plan ahead
The aforementioned tips should help with keeping your finances organised. Moreover, monitoring your finances and projecting future revenue and expenses will enable you to make better long-term decisions for your business.
Without this information, planning ahead can prove challenging. If you aren't looking at the future of your business, you could be taken by surprise. If you want to get ahead and stay ahead of the competition, you should plan as much as 10 years in advance.
You'll be able to mitigate unwanted surprises if you stay ahead of the ball.
Even if unexpected expenses do rise, if you've been practicing conservatism in your spending, you shouldn't run into any major problems.