What is looking ahead and
how do you look ahead?
Looking ahead financially in your business means to create a financial forecast where you map out the income and expenses of your business and what your cash balance will be as you move forward in time.
Use a tool like excel or even pen and paper to write it out. You can download a Profit & Loss + Cash Flow spreadsheet here.
If you don’t have a financial forecast in place, let me give you some tips on how to get started in a simple way.
- List all the money you know is coming in and when client by client and program by program. If you have too many clients to list, group them in a way that makes sense to you.
- List what expenses you expect to have in the future and fill them in going forward. Look at what has happened in the past and what you know will need to be paid moving forward.
- Enter the cash balance on the beginning cash balance line as of the date of the first of the month you are starting with.
- Fill in the amount you will pay for credit card payments, any loan payments, how much you will pay yourself, the amount you will move to savings to pay your taxes, reinvest in your business in the future and the amount you will set aside monthly in an emergency fund.
The spreadsheet should calculate your ending cash balance and roll that forward as the beginning cash balance of the next month.
Fill this in as completely as possible with everything you know is going to happen and
look forward to see what happens to the cash over time!
I know this is the scary part but please hang in there with me as we move through the next part. This is where things start to get good and will have the biggest impact for you.
- Is the amount coming in enough to cover your monthly costs?
- How much you want to pay yourself?
- How much do you need to set aside for taxes (if you are profitable)?
- How much do you want to save for future investments back into the business?
- Do you have an emergency fund?
Calculate the shortfall if there is one and then ask the question:
What can I do to get more money coming in the door NOW?
A note about how our powerful brains work and what they can do to help us:
When you present the clear situation and ask for direction your brain, conscious and unconscious, will begin to work on the problem and offer up solutions.Our brains are powerful and are designed to solve our problems, but we need to clearly tell them what the problem is.They can’t be much help to us when we leave them swimming around in worry and fear. So let’s tell them what the problem is. We do that by clearly knowing:
How much money is coming in each month?
How much money is going out each month?
How much we want to be able to pay ourselves?
What is the shortfall is?
How much would really make your life great?
If you aren’t short but instead have goals that you aren’t meeting, then you need to define those goals:
How much would you like to have in your savings account?
How much would you like to be putting aside for retirement?
What purchases would you like to save for and what is the dollar amount?
I invite you to believe there is help and support available to you.
Know what you need.
Ask: How can this happen?
Then get quiet and pay attention to the solutions that show up.
Things will likely start to improve just by doing this exercise of getting clear and asking for help but most likely what will happen is you will get ideas of what to do to improve things. This is where trust and execution come in. Trust what comes and follow through quickly with action.
Paying attention + Getting Clear + Brain Science + Magic + Action = Results
Rinse and Repeat monthly
Look Ahead is one of the Finance Friday Practices we work on in the Private Facebook group I lead. This private Facebook group is a Mastermind Group for entrepreneurs that want to increase profits in their business by paying attention to their numbers. Click here to join for daily and weekly inspirations, calls to action and be a part of a community working toward similar goals. http://loveyournumbersnow.com/financefridays