In any business, money is constantly coming in and going out. The amount of cash and cash equivalents that come into and out of your business is called cash flow. This isn’t the same as profit—profit is how much money you make. if you are making a tidy profit but it’s all sunk into paying debt or maintaining your building, you still don’t have any cash.
The goal of every business is to keep that cash flow positive. That means more money is coming in than you are spending. There are times you might have negative cash flow, such as when you’ve invested in significant equipment or made a major purchase. However, over time, your cash flow should return to positive.
A financial advisor can help you manage your cash flow and plan for big expenses. Here are three reasons to hire a professional for cash flow planning.
A Professional Knows the Questions to Ask
Creating a cash flow plan can be challenging if you’re new to business. Because cash flow isn’t the same as profit, it can be difficult to know what counts as positive or negative cash flow. It’s also important to understand which business moves, like taking out or paying off a loan, will increase cash flow either immediately or in the long term. For instance, hiring a new person will decrease cash flow right away, since you are paying their salary, but it may increase your cash flow later because you can keep the business open more consistently.
On top of that, you have many roles as a business owner. You’re the head of marketing, customer service, management, accounting, and more. It’s easy to make mistakes and miss details.
A professional financial advisor will help you create a plan that works for your business by asking the right questions. They’ll help you think of expenses you might have overlooked and set goals for selling more products and services.
Having an extra person thinking about your plan helps you create a better one!
An Advisor Helps You Get a Big-Picture View
As a business owner, it’s easy to get lost in your company’s day-to-day work and forget about the big picture.
A complete cash flow planning strategy will help you stay on track. You’ll understand how much you expect to earn and spend in a specific period and can set goals to help you grow. You can then create plans to increase your sales and cut expenses.
An advisor also helps you understand when it’s time for a big investment. You might be afraid to spend the cash in your business, but there’s a time for investments that will bring in a great return. This might mean new equipment or hiring another employee.
With a big picture view, you’ll know when to make those strategic moves without breaking the bank.
Professional Advisors Provide an Objective Viewpoint
You created your business, and you love it like no one else will. However, your attachment to it may hold you back from essential pivots or changes that need to be made.
With a financial advisor on your side, you have an objective outside viewpoint. Your advisor can help with adjusting the cash flow plan steps you have in place if something changes. You might have to hear some harsh truths about cutting expenses or creating intimidating goals, but a financial planner can help you understand what’s realistic.
A professional will also help hold you accountable to the goals you set and the decisions you make. That alone can help you avoid impulsive bad decisions and keep you on the path of profitability.
Work with a Professional Advisor for Your Cash Flow Planning
These three benefits are just the tip of the iceberg. Having a financial professional in your corner can help you be more confident in the fiscal decisions you make.
It’s hard to run a business, but you don’t have to do it alone. Let a financial advisor help you with cash flow planning and other financial decisions.
If you’re ready to connect with an advisor, we’re here to help. Contact us for more information today!