When your business is expanding, keeping track of your financial position can be difficult. Below are some road-tested tips to ensure your growth journey follows a smooth fiscal path.
Manage Cash Flow Daily
This does not necessarily mean you should log into your bank account daily, but you should have an idea of how much money is coming in and going out. Check to be sure invoices are being sent out in a timely manner and checks are deposited quickly.
Have a Plan on How to Spend to Expand
If you want your business to grow, you’ll need to work out how to reinvest your profits. Investing in the right mix of key products early on can provide a solid foundation for your business. Have a clear plan in mind for reinvesting cash flow and growth. An 80/20 ratio is a sound practice. 80% reinvested for cash flow and 20% geared for new products and growth opportunities. Your ratio might be different, but planning a set amount of “expansion” spending is a solid tactic for growth.