Whatever type of business you are in, it’s super important to know
how to keep your business alive during difficult economic conditions.
I have compiled a list of business survival tips to help you stay safe and prosperous during trying times.
Please let me know if you find any of them helpful, I’d really appreciate your comments.
Business Survival Tip #2
Keep a close eye on your Profit & Loss each month in addition to having a running 12-month
Cash Flow Forecast.
It is important that you understand what these reports are as well as be able to read the story they
are telling about your business.
Understanding these reports will help you uncover any potential financial problems before they
become readily apparent, and certainly before they could get out of hand.
Be sure to make your P&L as detailed as you can, splitting up all forms of income and even have
sub-categories in your Expenses and Cost of Goods Sold (COGS).
This will help to make things much easier to analyse and see where you’re funds are coming from
and how they are being spent.
Your Cash Flow Forecast will tell you in advance when you’ll be receiving payment, based on your
payment terms and when you’ll be needing to pay your bills at the different times they are due.
Your Cash Flow Forecast takes a bit of time to do properly, but it is well worth the effort.
I would recommend doing a forecast for the next 12 months and updating it each month so you always
have a 12-month forecast of your cash flows at any given time.
Your P&L should be updated monthly and key information would ideally be looked at weekly.
To sum up, Business Survival Tip #2: Know your P&L and Cash Flow