For small business owners, keeping your books in order can feel like a constant challenge to overcome. If you feel like you’re an owner who is struggling to keep your cash flow actually flowing, we’re here to offer some steps to help you to take control of your finances. By forecasting your revenue, you can better manage your cash flow and stay out of cash crunches.
How do I predict revenue for my business?
Revenue forecasting doesn’t have to be as scary as it sounds. In fact, it’s important to note that it’s difficult to accurately predict revenue, so don’t be concerned about creating a perfectly accurate report. The point here is to create a plan and have a picture of what your cash flow situation could be so you can make better-informed operational decisions.
Step 1: Understand your expenses
Before you can understand your revenue, you need to understand your costs. Record your fixed and variable expenses as your first step.
Step 2: Forecast sales
Using the sales data you have, and the figures from your expenses that factor into your product (i.e. materials, labor, etc.), make a conservative estimate of what your sales could be for the next week, month, quarter, etc. Depending on your business, it could be beneficial to have short and long-term revenue predictions to help you set revenue goals.
Step 3: Dream big
Keeping your revenue goals in mind, make a revenue prediction based on the sales you would like to have. It could be a “dream big” number at the end of the day, but it could also help you see the hard numbers of what it would take to get there. Just don’t forget to adjust your expenses (e.g., materials, subscriptions, etc.) to compensate for a potential surge in sales!
How to Manage Your Cash Flow
Now that you’ve created a revenue forecast report and set goals for your business, it’s time to make sure you’re financially equipped to meet your goals. Fifty percent of small businesses claim they experience cash flow issues which can lead to a host of other challenges. To avoid cash flow issues and crunches that will prevent you from finishing work — or worse, cause your business to fail completely, follow our simple steps below:
Step 1: Invoice your clients immediately
You can’t get paid from a client if you don’t send them a bill as soon as the work is finished. Don’t let your unpaid invoices pile up. Create invoices and accept payments right from your smartphone with Invoice2go’s mobile app. The sooner you invoice, the sooner you can get paid.
Step 2: Track invoices
Create an invoice tracking system that is easy to implement and manage. You don’t want clients and payments slipping through the cracks if you’re disorganized. With Invoice2go, reports are automatically generated to help you keep track of unpaid invoices and how well your business is performing. You can now also track when a customer has viewed the email with your invoice, which is extremely useful when it comes time to follow up.
Step 3: Get paid on time
Today, most people carry debit and credit cards rather than cash or checkbooks. In fact, some consumers will be less likely to work with you if they know you don’t accept cards. Make your business benefit from consumers’ affinity for charge cards by accepting credit or debit cards from anywhere. Use Invoice2go’s online payments feature, to accept credit or debit cards straight through the invoice. It’s easy to get started in a matter of minutes.