Your CFO LLC

Larger organizations, particularly private equity backed organizations, are highly focused on the 13 week cash flow forecast, but if you are an individual business owner with a small to midsize company, why should you also put the time and effort into creating an effective cash flow forecast? 📝 Creating an effective 13 week cash flow forecast requires planning for the immediate future of your organizational productivity. If you want this to work you will be required to think about more than just cash flow. 📌 Understanding how your cash flow works is key to lessening the stress involved with managing cash day to day. We have all experienced a cash crunch and, as a result, we all want to avoid this in the future! Frequently we make assumptions about how our cash flow functions that turn out to be false under closer examination. 📈 It is an iterative process. Each week the team will have to take a hard look at the prior week and seek to understand misses from the forecast, this process can identify issues in operational workflow that are able to be improved with new process implementation. 🚀 And last but not least, the process will give you a longer runway of notice for future cash flow concerns. The value in knowing what is coming so that you can make adjustments to mitigate or avoid a cash crunch cannot be overstated! This is particularly relevant anytime you are in a growth mode. The 13 week cash flow forecast is not just for the larger organizations! It’s time to sit down and take the time to understand your cash flow.

Today, in honor of #smallbusinessweek, I am providing some facts about and tips for #smallbusinesses. 📈 As of 2024, according to the SBA, there are 33.3 million small businesses in the US, which employ 61.6 million people. 💰 Since 2021 there have been 2.8 million established new small businesses created. 🚀 Small businesses created 17.3 million net new jobs between 1995 and 2021. 🔥 Small business owners are diverse: 22% of small businesses (including Your CFO LLC!) are owned by women, 21% of small businesses are minority-owned and 21.7% of small businesses are owned by immigrants. What does this tell you? Small businesses are the backbone of our communities and the economy, and supporting them injects a direct benefit to both! Now for the tips, what can small businesses do to help ensure they are one of the success stories? 1️⃣ Watch your marketing efficiency. Marketing is often the largest variable expense on a small (or even larger) business’ Income Statement. Do the analysis required to make sure your marketing dollars are effectively working for you. This is not a one-and-done exercise! It is something that needs to be ongoing. 2️⃣ Don’t miss out on revenue by leaving money on the table. Think through what your customers are telling you that they want and need, and then think through what you know they want and need but they are unaware of! Use this knowledge to develop additional streams of revenue that complement your core offering and have a high contribution margin. 3️⃣ Watch and plan for your liquidity. Growth is wonderful and we all want it, but it can be hard on cash flow! Plan for your growth and liquidity needs so you don’t find yourself caught out in a cash crunch! Doing the right strategic planning around growth upfront can prevent this and allow you to seek alternative sources of liquidity in advance. 👏👏👏 Happy #smallbusinessweek! Are you a #smallbusinessowner? What has been your experience? Do you have any tips to share? PS- the tips I shared today apply to all businesses, not just small businesses! ________ 👋 Hi! I’m Nicole Sithithavorn, a strategic partner for small and mid-sized businesses who want to improve their performance and build organizational value. Follow me and @YourCFO for more content like this!