CASH FLOW PROBLEM? DO THESE 4 STEPS. Cash flow is a “normal” problem for entrepreneurs. Ever heard that the bigger the pot, the bigger the crust? Cash flow is the same, the bigger the business, the more difficult it is to manage cash flow, without proper money governance, there will be problems
If you are facing this problem, what can you do? I just share my own experience, I don’t want to share the experience of others
1 – Cash Flow Analysis
This is the most important thing, but many people don’t do it. Simple things. Record money coming in and going out every day. But because I have never done my own analysis, that seems to be of no use.
By knowing where the money goes and which source money comes in, we will get an idea of how to optimize. Auto will get the idea. But if you don’t do it, you won’t get the idea
2 – Diversify Revenue Streams
One of the cash flow problems occurs because there are not enough sales to cover the monthly overhead. Business founders, have to be active in their heads to find other revenue streams. Just look for something relevant, don’t create something new. Because when you make something new, the operation will change. Look for only minimal operation changes to create a new revenue stream
3 – Bridge Financing
With bridge financing, we make short-term debt to cover the insufficient cash. If the company can do the financing, it’s ok, but if the company does the audit, how can it be done? His answer is that the owner has to give the money first. The company owes the owner, it’s okay, pay it back.
4 – Seek Investment
Different from the 3rd way we create liability, this way we create value. This time you can offer 10-20% of the company to other people who can pump in money. If you love share company, you can make an agreement to buy back the share. This method takes a little time compared to the 3 methods above and can be done immediately
This is very long. Read it all the way
We have to remember that this cash flow problem will always be faced by us. You have to overcome it, don’t give up. Who told you to be an entrepreneur? Good luck!
At the end of 2023, it would be great if we could ensure each other’s financial position.
It’s easy, Just need a piece of paper to scratch. Or on tissue paper, no problem.
How much money in? How much money out? List your monthly income. List monthly expenses.
Total monthly income – total monthly expenses = cashflow (+ve or -ve?).
How many assets? List all types of assets (cash, savings account, ASB, Tabung Haji, shares, house, car, etc.) How much debt? List all types of debt, (ASB debt, house, car, personal loan, credit card, etc.)
Total assets – total debt = networth (+ve or -ve?)
Yeayy can figure.
Pay attention to cashflow and networth. Good? Not good? Less? So, so? Not bad? Bad? The secret?
Ha now our financial position is no longer a mystery. Do we smile when we see those numbers? Or gloomy?
If you smile a lot, it’s good. Keep it up, keep it up.
If you are gloomy, you can still do something: Cut Cost (2C) and Make More Money (3M). Hopefully next year our finances will be better and stable for us. Remember, plan for peace of mind in the future. Let’s go 2024!
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I want to reshare because it’s not a Malay company that can make money
it’s just because they don’t manage their personal and business expenses properly, that’s why the business doesn’t progress. Since last year, I made a decision to only help businesses that also engage me as their personal financial planner.
Why? Because personal finance and company finance are closely related. Most people do business not to make the company rich, but to achieve personal goals, but when asked, many people do not have personal goals, so that’s why doing business is just a hobby, not a charity. The owner has no profit, but other people are rich. Cash Flow Problem ?
With proper financial management
There is one company that can pay the salary to its owner from RM 4.5k per month to RM 11.5k per month in less than 6 months and there is still an excess margin. They have just raised the wages of workers by RM 500 per person.
There is one more, make RM 300k per month, but the margin is 1%, there is no cashflow. The salary of directors cannot be paid. After 6 months, pay the directors combined salary of RM 17k per month, and have a margin of 5% and continue to improve even though his revenue has dropped to RM 225k per month.
Another cafe owner, in 2022 make sales of RM 450k a year, but losses in RM 65k. The owner had thought of closing the shop, but after the engagement started, he could have a breakeven plaque every 2 months, so he closed the cafe. The owner is happy to continue the business.
In the past, there was another company in engineering
the owner once sat for three months by the drain wondering how to find money to pay the workers’ salaries. Alhamdulillah, now there is no problem. What do all the cases above have in common?
- Diaorg started to focus on proper company management. Start monitoring financial data and make the right decisions instead of just following your whims.
- Clear each other’s personal goals. So there is a clear direction for the company’s journey.
- Personal finance is in order, know how much you need for commitment, spending and saving, so stop robbing the company’s money.
- Questions to ask the entrepreneurs out there? Are you doing business or are you doing an NGO to donate to suppliers and investors?