Cash management is a critical piece of owning a business and growth and success. That’s why it’s so important to analyze how you’re managing your cash and make a plan for the future. By doing this, you’re not only setting yourself up for success, but also making a back-up plan for times when business just isn’t booming.
After the last few years, with a pandemic and now inflation making things questionable for your business, you probably have a better understanding of how important having a Plan B and a cash cushion is for survival. If you didn’t have one before, start now so you’re ready for whatever comes next!
Prepare for the Unknown
The Profit First method has shown that the way to help your ecommerce business in hard times is by analyzing your data and making a plan. Through evaluating cash flow, you’ll have a better idea of where you stand and what you can do to improve.
Your priorities should always lie with the important things in your life. One of those things is going to be your business and employees. Obviously, cash is what keeps the business alive so it needs to be saved and protected at all times.
The next step is making a 90-day plan. This is when the 13-week cash flow plan comes into play. The goal is to save your cash for as long as you can, so you need to ask yourself some questions. How much will be coming in and how much will be going out over this time period? How can you bring more in and send out less? Through this, you’ll find areas that may not be as necessary as you thought or areas that may be more valuable than you knew.
The 13-week Cash Flow Plan for Ecommerce Sellers
The cash flow plan is a tool developed by bookskeep that we have used with clients for several years now to help direct them when it comes to cash flow. When the pandemic hit, we knew this would be an invaluable tool that we wanted to share. Since then, we’ve shared the plan in several blogs and in the Cash Flow Webinar we did with our partner, A2X Accounting.
Since we work specifically with Amazon and ecommerce sellers, the webinar leans more towards but it’s important to know that our 13-week cash flow plan will work for almost any business!
When we begin working on cash flow with a client, we always suggest that their first step be understanding the cash run rate. You need to know the amount of cash you have available on hand or that can easily be reached. Understand that this does not include inventory, this is cash in the bank or credit lines, etc. When you know the total number, you can figure out how long you can function normally if you had to use that money. You can then make other decisions based off that knowledge. However, if there are pretty much no funds to cushion you, you need to make the hard choice to let employees go as soon as possible.
Plan for Peace of Mind
It’s not too late for you to start! You can download our 13-week Cash Flow spreadsheet and get started today. If you get stuck, please watch our webinar. If the webinar doesn’t have your answers or you need help with more than just cash flow, reach out to the bookskeep team today!
Interested in Profit First?
You can also sign up for the Profit First for Ecommerce Sellers Online Course. As a Mastery Level, Certified Profit First Professional, I will teach you why Profit First works so well for ecommerce businesses and the particular challenges for businesses that have physical products requiring inventory management. You will learn how your behavior drives your money management habits for your business and how you can set up your business bank accounts to work with your habits.
Check out all our ecommerce accounting and profit advising services here!
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