Contractor U: The cash flow forecastCanadian Contractor Business Financial risk
If you are going to grow your business, you will need to finance it somehow. Yes, there is a risk to that, but it's a calculated risk. Understanding your cash flow is one of the calculations you will need to do.
In the next print issue of Canadian Contractor, I begin a two-part series on Financing Growth.
Here’s an excerpt from that forthcoming article, in which I talk about the fact that deciding to grow your business beyond a One Man Show does involve a calculated risk.
Here’s just a small part of what I wrote. Please feel free to take advantage of the Cash Flow Forecast Sheet that I will send you, no obligation, from Renovantage.
Risk for the short term
Commonly, the only way to grow is to accept some risk for the short term. Your investment in your future will mean that you do not have as much money now as you would if you didn’t invest. You have to realize that in the short term it will look like you are going backwards. However, when you follow your plan you know that you will come out ahead in the end. It is like building a home. In order to build up, you have to dig down first. You have to dig down in order to put in the footings which are ultimately the foundation of the house. The building can now be built up. Your business is no different. You will most likely see profit go down as you fund growth but the investment is the foundation on which to build your business.
Investing in resources to help you build your business is a fundamental element in your success and it all starts with a well thought out financial plan. This is a good time to mention how important cash flow is when expanding. Cash flow is the essential piece of the puzzle when expanding. Understanding the cash needs of your business as it expands is critical. If you would like us to send you a cash flow forecast sheet, click this link and enter your first name and email address. The cash flow forecast sheet will help you plan what your cash needs will be as your business expands. It will show you how much cash you will need to inject into your business. The key is to make the investment as low as possible, to know how much is needed, when you will need extra money and when you can expect a return on your investment.