“5 Simple Ways To Track Your Cash Flow”

Posted on Dec. 18, 2009 by Baeth in General

Ah, cash flow. The life-blood of a successful business. Without cash, you can’t grow, invest or pay yourself or your staff. It seems obvious, but in my work with hundreds of entrepreneurs and desirous-of-being entrepreneurs, I can’t count the number of times I’ve said, “What are your revenue streams for this month?” to be met with blank stares, stammering, excuses and a whole lot of fear.

If this is you, first of all, let yourself off the hook and have compassion for your situation. You are hardly alone in having money anxiety. Second of all, it can be remedied – IF you are willing to take some simple, albeit uncomfortable, steps toward financial solvency.

Here are 5 steps I feel are critical to a successful cash flow experience.

Step #1: Assess Your Current Financial Situation

Obvious, right? Set up a meeting with your bookkeeper (you have a bookkeeper, right?) and go over your Profit & Loss statement (P&L). I recommend your bookkeeper have at least three years expertise in using Quickbooks online. If you don’t have a bookkeeper - yet - you’ll need to do this yourself. ASAP.

Then answer these questions: What debts do you have? What products and/or services in your business bring you the most revenue? What products and/or services are losing you money? Of the items that do not generate revenue to your bottom line, do these expenses bring you more clients? (If YES, you may want to keep them!)

Finally, how much revenue do you need each month to meet all your expenses (including debt repayment) and turn a profit?

Step #2: Set Your Money Goals

What is your money goal for 2010? Now, divide that by 12. For example, let’s say you want to bring in $75,000 in 2010. That translates to $6250.00 per month. Most of you could do that with a couple of new clients, right?

Now, divide 6250 by 4. That’s $1562.50 per week. Divide by 5. That’s $312.50 per workday each working week. (I didn’t account for holidays and days off, so you may want to factor that in.)

Remember, you might earn $12,000 in one month and $6000 in another. The key is to keep meeting or exceeding your daily, weekly, monthly and yearly benchmarks. For many of you, you will do this easily, client-by-client.

Write down your goals in pencil in a simple notebook to track them.

Step #3: Determine What You Will GIVE In Exchange for the Money

How will you meet your monthly money goal? In what ways do you want to deliver your products and services in exchange for money?

For example, let’s say your monthly goal is $6250.00. You determine that you can bring in that revenue by selling 25 copies of your new e-book at $37 ($925), 4 coaching clients at $600/month ($2400) and 10 people at a one-day workshop costing $297/person ($2970). The grand total = $6295.00. Obviously, you can play with the monthly number in whatever way suits the business you are in.

The KEY to success in meeting your money goal is two-fold. You MUST have confidence in your ability to help your client solve a problem they are having AND you MUST know how to sell: online, offline and by phone.

If you have any issues sharing your work with others and asking them to consider working with you, I HIGHLY recommend you take as many sales classes as possible and make as many calls as possible to get over this fear. OR hire a gifted salesperson to do it

Step #4: Do The Money Actions First Thing In The Morning

You probably went into business for yourself to do the work you love, right? You probably LOVE helping people get fantastic, transformational results and you love adding to your expertise. For now, set that aside, knowing that those decisions are already IN YOU, a part of you.

Now, when you show up to your office each day, ask yourself, “What tasks will bring me closest to the money most quickly?” For most of us, it’s being on the phone with prospective clients, sending out an email to prospective clients or a direct mail offer to prospective clients. Other precious, important uses of your time come in the form of delivering your services and creating new products and services.

The business you are really in is attracting new clients and fabulously serving your current clients. Are you tracking where your clients come from? How many client lead generation tools are you using? (search engine optimization [SEO], pay-per-click [PPC], free newsletter, direct mail campaigns, radio/TV ads and interviews, article submissions, etc. etc.?)

Step #5: Remember Your BIG VISION

What is the purpose of the money your business generates for YOU? Maybe you want to pay off your mortgage and pay for your kids’ college tuition this year. Maybe you want to travel to India and live there for six months. Maybe you want to stop working one-on-one and create a product-based business.

Whatever your goals are for your money, write down 5 for 2010.

Here’s an example list:

1. Pay off mortgage on my home
2. Hire two new sales people
3. Donate 10% of my gross revenue to my church
4. Redecorate bedroom
5. Put 20% of revenue in long-term savings (stocks, precious metals, real estate)

Bonus Tip: KNOW “Your Purpose”

If you know your Life Purpose, determining precisely the ‘work you love’ becomes very easy. It’s a ‘no-brainer.’ Business skills, selling skills, teaching skills - all these things can be learned. But the ONE THING that ONLY YOU can do is live your life purpose. As Doreen Virtue writes, “There is no competition for your life purpose.” ONLY YOU can live it! Are you ready?

Until Saturday, December 19^th, you can receive a Life Purpose hand analysis session with me for $600 off the regular price.

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