Increase the value of your business through cash planning.

by Dave Saunders,CPA, CMA
Partner, B2B CFO®

 It’s been said a million times, but it is always worth repeating . . . “Cash is the life blood of every business.”  A small business can survive a number of mistakes, and learning from these mistakes is generally what makes the company stronger. Unfortunately, running out of money is generally not survivable. The owner of a small business also has the challenge of managing their own personal finances and balancing investment in their business, paying employees and vendors and taking a salary from the business. Worrying about personal and business cash shortages at the same time puts extreme pressure on the business owner and may distract them from achieving their objectives.

If cash is the life blood of a business, then cash flow is the heart beat of the business. Cash flow forecasting is nothing but your best estimate of the timing of cash receipts and cash outlays. It is generally controllable, manageable and more predictable than you might think.

Expected future cash flows are an important factor in establishing a business valuation.  One of the most important things that you can do to build lasting value in your company is to create discipline and processes to plan for and increase profits and cash flow.

This involves:

  • Maximizing profitable volume;
  • Paying attention to pricing and margins;
  • Increasing the velocity of cash through focus on your cash conversion cycle;
  • Always knowing what you are spending your money on cialis pas cher europe and ensuring that spending is tied to your priorities;
  • Developing a financing strategy that matches debt to the type of asset being acquired or expense being incurred.

Strong cash flow, aided by a commitment to cash planning and discipline, also helps increase the value of your business by:

  • Allowing your management team to focus on its customers, products, markets and your vision. If your company is struggling with cash flow, over 50% of your time and energy as CEO can be

    diverted from running and growing the business to short-term cash management.

  • Keeping you focused on your mission.  Cash shortages generally result in abrupt starts and stops to business execution which may cause you to lose momentum.  As we all know, it’s rather difficult to drive an automobile with a foot on the gas and a foot on the brake.
  • Focusing spending to support your priorities. Spending to support your strategy and priorities almost always has a higher return on investment than other types of expenditures.
  • Reducing the risk that a potential buyer of your company will not make money after the sale. Increased levels of risk result in direct reductions in valuation.

My mission is to help business owners take the guess work out of improving profits, increasing cash flow and driving business value.

What difference would it make to your business if you could:

  • Trust your financial forecasts and understand your cash position?
  • Rely on your financial statements and be sure that your accounting is accurate?
  • Find cash from within your business to invest and grow?
  • Understand the financial and cash impact of an investment, a decision or other significant event on your business?
  • Have more time to focus on your customers and products and to lead your business?
  • Stop ending every month in a panic?

I am passionate about working with owners who are committed to increasing the value of their business.  Many of these owners are tired of financial processes that don’t accurately report on the past or predict future cash flows and that are challenged in bringing value to managing business performance and decision making.  They’re frustrated by surprises, a lack of actionable information, inconsistency and not understanding results.  Most importantly, these business owners will actually do something about these problems.  They want to make the right decisions to grow their business, to improve operational performance, to increase cash flows and to consistently win and they want a stable financial platform on which to grow the business – all of which drives business value.

Do you need help in implementing financial processes that will  increase the value of your business and improve operational performance?  If you would like to learn more about my services, please send me an e-mail or call me at 480-433-1310.

 

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