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Four simple steps to creating your own company cash flow plan

Many small businesses fall short when it comes to telling their financial future, but it doesn’t have to be this way. In four simple steps, you can have your cash flow charted out like a champ!

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You don’t have to be a nerd

Every week my boyfriend finds me working in an Excel spreadsheet, inputting upcoming paycheck amounts and subtracting scheduled expenses for the weeks ahead. He thinks it’s nerdy but I love it because it gives me a sense of peace knowing when I have money coming in and when it’s going out. As you operate your business, cash flow determines how much of your funds you will have access to in a given period of time. The lower it is, the tighter your operations have to get until you receive a new stream of cash. Keep reading for tips on how to create your own corporate cash flow.

1. Project

First, realistically project your upcoming revenues. If you know you have an account that’s close to being signed, record what you think the deal will close at. But keep in mind, this isn’t the time to dream of pie in the sky – project a number that is readily achievable. If you estimate too high and don’t deliver, you will have less cash on hand to fund the initiatives you started based on your initial projection.

2. Business opportunities

Have funds in case an opportunity arises that you need to jump on. Sometimes deals materialize in places you weren’t even looking, so it’s important to have money set aside that can be accessed in these situations. You have to spend money to make money, and if all of your funds are locked up, you could get passed by for the next guy.

3. Calculate your expenses

Round up all of your regular expenses. You know that each month you’re going to spend a certain amount on rent, utilities, etc. Add these numbers together and categorize the payment as money that will automatically come out of your account each month. If there are one-time expenses due that month, add those in as well.

4. Due dates

And lastly, be mindful of client payment due dates as these directly determine the rate at which cash will flow throughout your business. If the majority of your customers pay in the middle of the month but the lion’s share of your bills is due on the first, you won’t have positive cash flow when you need it. Or if a customer wants to evaluate your product before they submit payment, you may not have enough of a cash flow to take care of other expenses that arise. Be mindful of these differences in payment dates as they affect how much cash you have in your account ready to use.

Now, create your plan

Once you have these numbers, you can create your plan. Write down the revenues you expect to come in and at what dates they will be usable. Next, subtract your regular expenses and note at what time intervals they will be coming out of your account. Once you have this difference, determine how much of it you want to set aside for business opportunities and improvements, and delegate it into a separate account. The money you have left over is the result of a well-organized cash flow that you can easily repeat over and over.

Destiny Bennett is a journalist who has earned double communications' degrees in Journalism and Public Relations, as well as a certification in Business from The University of Texas at Austin. She has written stories for AustinWoman Magazine as well as various University of Texas publications and enjoys the art of telling a story. Her interests include finance, technology, social media...and watching HGTV religiously.

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1 Comment

1 Comment

  1. seals and gaskets

    November 23, 2012 at 12:53 pm

    Thanks for such nice tips Destiny, this post is full of knowledge and have every important factor. To create a plan you should be to involved in your project being nerd you can not enjoy your work and can not get best of you for business.

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Business Finance

Clyde helps smaller brands to offer product protection programs

(BUSINESS FINANCE) For small brands that sell not-so-little items, Clyde is a big deal! Now you can offer product protection normally reserved for the big brands.

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product protection

For small businesses seeking to adapt to their new or growing online presence, Clyde, a platform allowing small business consumers to receive extended warranties and protection on purchases may be the answer.

Due to the current pandemic, online retailers have reported on average, a 200% increase in digital sales. Online commerce is only expected to continue its growth with 52% of consumers suggesting they will not return to in-store shopping, post COVID-19. With online shopping in demand, stolen packages, damaged products, and lost goods are also surging.

If you’re ordering from a superstore like Amazon, Target, or Walmart, chances are your items are protected and will be quickly replaced upon a discovery of any of the above issues. However, for smaller companies, protection on consumer goods is usually not offered, not because smaller companies don’t want to give their customers this option, but because finding insurance for small businesses is hard.

Clyde, a company working to provide product protection programs to small retailers through the navigation and connection to insurance companies, intends to change that. Clyde gives small businesses or as their CEO, Brandon Gell, would say, “everybody that’s not Amazon and Walmart,” the opportunity to provide their customers with individual product protection or an extended warranty contract that can be purchased at checkout.

Clyde also provides the retailer with a portion of the insurance profit, serving as an incentive for smaller companies who usually get left out of this profitable market. Product protection is responsible for a whopping $50 billion market, so getting in on the game is key. The company also provides sellers with critical data analytics, product performance statistics, that otherwise would not be obtainable to smaller companies.

Not only is Clyde protecting consumer purchases, but its mantra acts in the best interest of smaller companies normally left out of big commerce perks. The company’s dedication to provide smaller businesses with access to revenue and its consumers with product protection at a time where the demand is higher than ever may allow this company to flourish.

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Business Finance

Will cash still be king after COVID-19?

(EDITORIAL) Physical cash has been a preferred mode of payment for many, but will COVID-19 push us to a cashless future at an even faster rate?

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No more Cash

Say goodbye to the almighty dollar, at least the paper version. Cashless is where it’s at, and COVID-19 is at least partially to thank–or blame, depending on your perspective.

Let’s face it, we were already headed that direction. Apps like Venmo, PayPal, and Apple Pay have made cashless transactions painless enough that even stubborn luddites were beginning to migrate to these convenient payment methods. Then COVID-19 hit the world and suddenly, handling cash is a potential danger.

In 2020, the era of COVID-19, the thought of all the possible contaminants traveling around on an old dollar bill makes most of us cringe. Keep your nasty sock money, boob money, and even your pocket money to yourself, sir or madam, because I’ll have none of it! Nobody knows or wants to know where your money has been. We like the idea of taking your money, sure, but not the idea of actually touching it…ewww, David. Just ewww.

There is no hard evidence that cash can transmit COVID-19 from one person to the other, but perception is a powerful agent for changing our behavior. It seems plausible, considering the alarming rate this awful disease is moving through the world. Nobody has proven it can’t move with money.

There was a time when cash was king. Everyone took cash; everyone preferred it. Of course, credit cards have been around forever, but they’ve always been just as problematic as they are convenient. Like GrubHub and similar third party food delivery apps, banks end up charging both the business and the consumer with credit cards. It’s a trap. Cash cut out the (greedy) middle man.

Plus, paying with a credit card could be a pain. Try paying a taxi driver with a credit card prior to, oh, about 2014 when Uber hit the scene big time. Most drivers refused to take cash, because credit cards take a percentage off the top. Enter rideshare companies like Uber. Then in walks Square. Next PayPal, Venmo, and Apple Pay enter the scene. Suddenly, cabbies would like you to know they now take alternate forms of payment, and with a smile.

It’s good in a way, but it may end up hurting small businesses even more in the long run. The harsh reality of this current moment is that you shouldn’t be handling cash. No less an authority than the CDC recommends contactless forms of payment whenever possible. However, those cabbies weren’t wrong.

The banking industry has been pushing for a reduced reliance on cash since the 1950s, when they came up with the idea of credit cards. It was a stroke of evil genius to come up with more ways to expedite our lifelong journey into crushing debt.

The financial titans are very, very good at what they do, at the expense of all the rest of us. The New York Times reported on the trend, noting:

“In Britain alone, retailers paid 1.3 billion pounds (about $1.7 billion) in third-party fees in 2018, up £70 million from the year before, according to the British Retail Consortium.

Payment and processing companies such as PayPal (whose stock is up about 55 percent this year) and Adyen, based in the Netherlands (up 72 percent), also stand to gain.”

All kinds of banking-related industries stand to benefit as well. Maybe we’ll go back to spending physical cash one day, but I don’t think there’s any hurry. Fewer old grandpas are hiding their cash in their proverbial mattresses, and the younger, most tech-savvy generation seems perfectly content to use their smart phones for everything.

We get it. Convenience plus cleanliness is a sweet combo. If only cashless payments weren’t such a racket.

If this trend towards a cashless future continues, future travelers may not experience what it’s like to fumble with foreign currency, to smile and shrug and hand over a handful of bills because they have no idea how many baht, pesos, or rand those snacks are. They may not experience the realization that other countries’ bills come in different shapes and sizes, and may not come home with the most affordable souvenirs (coins and bills).

We shall see what the future holds. Odds are, it may not be cash money, at least in the U.S. I hope the cashless movement makes room for everyone to participate without being penalized. We’re in the middle of a pandemic, people. We need to find more ways to ease the path for people, not callously profit off of them.

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Business Finance

How NASA helps small businesses reach for the stars

(BUSINESS FINANCE) NASA has been providing $51 million in grants to small businesses and innovators.

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NASA grants

With the political and social climate that we are all trying to survive this summer, there only seems to be a few things that bring us a light of hope. For some it’s the little gestures that keeps the smiles on our faces; little helping hands that keep us going from day to day. But thanks to some forethought in our government system, there are some rather large helping hands coming down from the top as well. The organization that sends people to the moon is also making some dreams come true here on Earth.

NASA has just announced their latest batch of small business grants. Grants that amount to a total of approximately $51 million. This money is being sent out at the most crucial early-stage of small business funding. Over 300 businesses are receiving up to $125,000 to develop and bring new technologies to the world.

This grant system has been in place nearly as long as NASA itself. The Small Business Innovation Research/Technology transfer program is designed to bring in entrepreneurs and inventors’ ideas, and combine them with NASA’s assets to bring their dreams to fruition, bringing something from the lab to the marketplace.

It is set up into a three-phase system. According to The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR), the first phase, Idea Generation, provides grantees with up to $125,000 for a 6 – 12 month period to “establish the technical merit, feasibility, and commercial potential of the proposed R/R&D efforts and to determine the quality of performance of the small business awardee organization prior to providing further Federal support in Phase II”. If they succeed, they may be eligible to move onto Phase II, where they will be awarded a new grant of $750,000 for 2 years to continue the R&D efforts and start on a Prototype Development. Phase III is called the Infusion/Commercialization stage and it is the culmination of years of work and grant access for these businesses. This also includes a few extra requirements like matching funding for things like marketing.

Over the years, the selection has covered numerous disciplines with an extraordinary range of industries. Some of the highlights this year are high-power solar arrays, a smart air traffic control system for urban use, a water purification system for use on the moon, and improved lithium-ion batteries. These are just a few of the many innovative projects. The list covers a huge assortment, but a few people have noted the number of neuromorphic computing efforts as well.

This list is updated periodically throughout the year as each deadline is met from previous grant holders. It’s a constantly updating assortment of tomorrow’s toys, and a great way to look toward the future.

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