One mistake most businesses make is to believe that if you’re making a profit then business is going well. It’s simply not the case, there’s so much more to your business finances than profit. Having a nice steady cash flow stream coming into your business plays a huge contribution to your business success. Without a healthy cash flow stream you’ll find yourself struggling to pay bills and even going into debt in order to keep your head above water. 

What do we mean by cash flow?

Cash flow refers to all the monetary incomings and outgoings that pass through your business. If more money is going out than coming in, then you have a poor cash flow. If more money is coming in than going out then this is a positive cash flow. However for it to be healthy it needs to be steady and consistent throughout each month. If you have all of your income being drip fed into the bank throughout the month and all your expenses going out at once this means your cash flow is no longer healthy. 

There are steps you can put in place in order to improve your cash flow. You can read our blog about this here. But in this blog we’re going to talk you through why it’s important to have a healthy cash flow if you want your business to be a success.

What’s the importance of healthy cash flow?

Around 80% of small businesses fail in their first year due to poor cash flow. Around 50% of those who survive their first 5 years then go on to fail for the exact same reason. So this is why we can’t stress enough to you the importance of maintaining a steady cash flow. 

A healthy cash flow ensures that you can meet all of your current financial commitments as well as plan ahead for the future. Your business is more likely to grow and flourish with a reliable cash flow. You will be more likely to secure loans and other investments if you can prove that you have enough cash behind you. 

At Bluebells Bookkeeping we offer a cash flow forecasting service to our clients. This gives our clients visibility of their future finances by using historical data. We know that you can feel overwhelmed as a business owner when it comes to all the numbers so that’s why we will talk you through the results of your cash flow forecast. We can help you to put steps in place to improve your cash flow and support you with setting your goals in order to get your business where it needs to be.

Having an insight into your future finances allows you to make better business decisions and set realistic goals and plans. If you don’t have this insight you could make the wrong decisions for your business which could put your business at risk. 

By taking the right steps to improve your cash flow you will understand where you are overspending. If you are overspending in particular areas this can have a knock on effect with paying other bills. This can cause friction with the relationships you have with your suppliers and that’s really not good for business or your reputation. 

Without a healthy cash flow your business can’t grow. You can’t invest in the right staff or equipment without the money behind you.

Make a change to your cash flow today and get in touch so we can get your business back on track.