Futrli Forecasting and Reporting

BUDGETING

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YOU’VE EXPERIENCED AN ENTREPRENEURIAL SEIZURE AND HAD A VISION OF WHAT YOU’D LIKE TO ACHIEVE. YOU’VE DEVELOPED A PRODUCT OR SERVICE, WHICH INTUITIVELY YOU KNOW WILL RETURN VALUE TO THE MARKET. YOU’VE FORMED THE LEGAL ENTITY, STARTED TO BUILD AND MAYBE EVEN SELL. YOU FELL IN LOVE WITH THE HUSTLE, DECIDED TO NURTURE YOUR BABY, AND YOU’RE TEMPTED AT EVERY TURN TO SPEND MONEY SO YOU CAN GROW YOUR BUSINESS AS FAST AS POSSIBLE. HOWEVER, THAT’S NOT FINANCIALLY PRUDENT.

THERE’S A BLUEPRINT TO BUILDING A SUCCESSFUL BUSINESS. IT’S AN EQUATION. AN ACCOUNTING EQUATION. ACCOUNTING IS THE LANGUAGE OF BUSINESS. THE CASH FLOW STATEMENT IS THE CONNECTOR BETWEEN THE BALANCE SHEET AND INCOME STATEMENT. YOUR COMBINED FINANCIAL STATEMENTS TELL THE STORY OF YOUR BUSINESS.

CASH FLOW IS THE LIFEBLOOD OF YOUR BUSINESS NO MATTER WHERE IT’S AT IN ITS LIFE CYCLE, AND ESPECIALLY IF YOU’VE NEVER BOOTSTRAPPED A STARTUP FROM INCEPTION BEFORE, YOU NEED AN ACCOUNTING EXPERT TO KEEP YOUR SPENDING REIGNED IN AND ON TRACK TO ACHIEVE, MAINTAIN AND GROW PROFITABILITY. I’VE WITNESSED BUSINESSES GO BANKRUPT, LIQUIDATE AND DISSOLVE BY DIGGING THEMSELVES INTO A HOLE TRYING TO GROW TOO FAST DUE TO LACKING FINANCIAL ACUMEN.

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EVEN ONCE YOU’VE “MADE IT,” YOU CAN’T SIMPLY SELL YOUR WAY UP AND UP. THIS IS ESPECIALLY TRUE IF YOU SELL ON PAYMENT TERMS BECAUSE YOU ALSO HAVE TO COLLECT THAT MONEY. IN BETWEEN THE SALE AND COLLECTING PAYMENT, YOU HAVE TO COVER PAYROLL, RENT, AND OTHER OVERHEAD EXPENSES. YOU MAY EVEN HAVE TO FRONT MATERIAL/PRODUCT COSTS. AND SOME ACCOUNTS RECEIVABLE TURN INTO BAD DEBT. THIS MEANS YOU CAN’T GET AHEAD OF YOURSELF AND SPEND TO YOUR HEART’S CONTENT.

THIS MEANS YOU MUST UNDERSTAND WHAT COSTS IT TAKES TO MAINTAIN OPERATIONS EACH MONTH, STICK TO PLAN AND TUCK AWAY RESERVES TO SUPPORT THE BUSINESS DURING A LULL. AND WHEN IT COMES TIME TO SPEND MONEY ON GROWTH ENDEAVORS, WHICH RESULTS IN FUTURE REVENUE, YOU CAN’T OVERSPEND BECAUSE YOU NEED ENOUGH CASH TO STAY IN BUSINESS AND MAINTAIN YOUR CURRENT LEVEL OF OPERATIONS.