Cash flow is like the financial heart of a business startup: it needs to be beating hard and steadily to ensure that your business stays healthy and ready to grow. Knowing how to manage cash flow is essential for you to have control over the money that comes in and out of the company, avoiding surprises and problems that can undermine your success.
Monitor the inputs and outputs of your startup
One of the first steps to keeping your cash flow in check is constantly monitoring the money coming in and out of the company. This may seem obvious, but believe me, many startups end up winding up because they fail to record small expenses and revenues on a day-to-day basis.
Keeping a detailed record of all entries and exits helps you know exactly how much you have in cash at any time.More than that, this practice gives a clear and accurate view of the financial health of the startup.
Predict fixed and variable expenses
A common mistake among entrepreneurs is not planning expenses properly. Knowing how to distinguish between fixed and variable expenses is essential to make better financial forecasts.Fixed expenses are those that you have every month, regardless of how much the company invoices, such as rent, wages and service accounts. Already variables, such as marketing and maintenance, can change according to the needs of the business.
When you make a realistic expense forecast, it becomes much easier to adjust the budget as needed. If the month is tight, you can hold on to the investment in marketing, for example, but you can not fail to pay the rent. Therefore, understanding what is fixed and what is variable makes all the difference.
Create a reserve fund for the startup
Another key point for the startup that wants to survive and grow is to have a reserve fund, which is nothing more than a “savanc” for the company, designed to cover unforeseen events and ensure that the business continues to operate even in difficult times.Wonder if suddenly one of your biggest customers delays payment or an essential equipment breaks down?Having money saved will ensure that unforeseen events do not leave you in the red.
The tip is: start small. Even if you can separate a low value at the beginning, the important thing is to create the habit. Over time, the fund will grow and you will have a much greater financial security to face any setback.
Use financial management tools
Do not try to manage cash flow at the base of the notebook or loose spreadsheets.There are several financial management tools that can automate the process and make your life much easier.Financial management software helps to control cash flow automatically, facilitate the visualization of financial movements and even give insights for you to make more informed decisions.
Tools like QuickBooks, ContaAzul and ZeroPaper are just a few examples of systems that can make all the difference in the day-to-day life of a startup. In addition to being affordable, they allow you to have full control over your finances, avoiding the chaos of trying to do everything manually.
Review cash flow regularly
Cash flow may not be something you see once and then forget. Regular review is essential to ensure you are on track and identify possible adjustments that need to be made. It can occur weekly, biweekly or monthly, depending on the volume of moves the company.
Constant review also helps to identify trends. For example, you may notice that always in a certain period of the month your expenses increase more than anticipated or that certain customers always delay payment. These details are valuable and contribute to adjusting your financial strategies in order to maintain positive cash flow.
A well-managed cash flow is the key to your startup's success
A well-managed cash flow is undoubtedly one of the secrets to the success of a startup. Start applying these tips as soon as possible and watch how the financial health of your company will improve.
The process may seem laborious at first, but over time it will be a natural part of the routine. The benefits are many: more control, less stress and a startup ready to grow in a healthy and sustainable way.
