Cashflow management for small business


Many small business fail in their early years not beacuse the enterprise is not viable but beacuse they are unable to accurately forecast, plan and manage their cashflows. What solutions or advise can be given to such business that will help them survive competitively ?
Also, what financial structures should they adopt i.e mix of debt and equity, what kind of debt or equity is recommended etc noting that they are small businesses.

Evans Iyamu, MBA
10 months ago

4 answers


One suggestion would be to go outside. There are plenty of qualified consultants (small businesses themselves) who can spend a few hours a month and put a business on right track for Cash Flow.
Another way is to ask someone to set it up in excel or other simple tool and maintain going forward.

Lee Leiderman
10 months ago
Thank you lee, it is really good to know that simplicity is the greatest sophistication. Just the use of simple excel and asking for affordable help can help the company not only stay afloat but sail in their desired direction. - Evans 10 months ago

Excel is one of the easiest softwares around. Build a "little excel ss " budget/forecast model. First, build the budget for each month. Next, each month, fill in the actual information using the busineess on line bank account. This will usually "sober up" the owner that actual cash flows are more difficult to achieve than budgeted cash flow.
Establish a relationship with a local bank. Many small business owners end up using high intertest rate credit cards because they find it easier than establising a relationship with the bank. Establising a line of credit will smooth out the "peaks and valleys" for many small businesses.

Mark J. Rosenblum, CPA
10 months ago
Thank you Mark, I fully agree with you. When I consult for small and medium scale enterprises, a common fear is that they can't afford big softwares and consultants cost. It's refreshing to know as you clearly stated that simple excel can be very useful. What methods will you recommend to help the entrepreneur manage his finances with minimal help from a consultant or external expert ? - Evans 10 months ago

I agree with Mark J. Bosenblum, CPA utilizing the proven, inexpensive P&L Excel Spread Sheet B Model of the Business in Planned vs Unscheduled Income v Expenses in detail for each of the 12 months accrual in the Fiscal Year & then the 13th Summary Report Spread Sheet showing
Planned Income v Planned Expenses
Un-Planned Income v Un-Planned Expenses
This Excel Spread Sheet will pin point the Businesses P&L by month for seasonel trends
After accruing 7-8+ year of Busines P&L Data
Planned vs Un Planned Data
You will be able to use historically proven Box Jenkins Statistical Forecasting Modeling
in which we Summarize @Sum add up each of the 7-8+ years months January-December Accrued P&L's
Totaling up the 12 months and the 13 Annual Summary Numbers
Divide these & Years Of Totals by 7 of 8
to develop a 95.0% Level of confidence in the BoxJenkins Forecasting
that these 7 Years of accruals or 8 Years of accrusla
Divided by 7 or 8 for 8 years have a 95.0% Level of confidence for the Business Owners, C Levels, CPA's, Lawyers, Outside Accoutants to Analize for Business Decision Makeing
Gerard JC La Tournerie
Wexford Systems, LLC.

10 months ago
Thank you Gerard. I am excited about your response as it is very detailed and attention to financial details is what startup companies require. I once read a book that described the resultant effect as the "miracle of discipline". - Evans 10 months ago

Layout out your vision board and build your financing model around it. Excel is a great tool and easy to maneuver when compiling your forecast and actual spend. Finding a consultant or an experienced accountant to review your books monthly is also a great option.

El Elrod
10 months ago
Thank you El Elrod. - Evans 10 months ago

Have some input?