2014-10-10 10:39:50 Money English Understanding cash flow and your business' finances is vital to success, but it's also something many of us avoid. Here are some tips to... https://d2yxjugd6jl4bj.cloudfront.net/wp-content/uploads/2014/10/08232622/LeslieBarber2.jpeg cash flow How My Small Business Taught Me to Embrace the Numbers

How My Small Business Taught Me to Embrace the Numbers

4 min read

I co-founded my business NutraBella, Inc. in 2005 after hearing my pregnant friends complain about their horse-pill sized prenatal vitamins. We dreamed of giving women better vitamin options with Bellybar. We launched with passion, dreams and optimism, excited to solve this problem for our pregnant customers.

What we never could have predicted were all of the hurdles we would encounter— year after year—especially when it came to our finances and cash flow. Although I went to business school, spreadsheets were never my thing. I convinced myself that my brain just doesn’t work that way: I’m more creative, a storyteller, a sales and marketing type.

And lucky for me, my co-founder is a brilliant ex-investment banker who can run circles around the most serious Excel jocks. Yippee! No numbers for me.

But the story doesn’t end there. Three years into the business, I realized that abdicating the numbers to someone else was hurting my ability to help the company grow. I thought “ignorance was bliss,” but really, it disabled me from being able to come up with helpful ideas to bring more cash into the business or to increase revenue.

I knew I needed to change, to learn and to open my mind to the science of running a business. So I dove in headfirst. I took over a bunch of accounting and finance duties—terrifying! But with my co-founder’s help (and a little flailing on my own), I started to put the pieces together.

Here are three reasons for you to consider doing the same:

LeslieBarber11. Cash Is King … and Queen

When we launched, we never would have predicted all of the hurdles we would encounter—year after year—especially when it came to cash flow.

From the moment we started, cash flow was always a challenge. How do we get funded? Do we raise money? Should we crowdfund? And from Day 1 on, we were always navigating the cash flow waters—purchasing inventory before we got paid and chasing customer payments, among others.

It’s not only critical to know how much cash you have today; you simply must know how much cash you need tomorrow, and next week, and next month. Cash flow surprises are the worst. Don’t let them destroy what you have built.

2. Running a Business Is an Art and a Science 

I really wish that doing what you love and following your passion could be enough to make a living and live a successful life.

One of my heroes, Oprah Winfrey, once said something like, “Do what you love, and the money will come.” I agree that we should all be so lucky as to do what we love to do everyday—many of us start businesses for that exact reason.

But if all you want to do is follow your passion, go work for someone else! Then, they will take care of all the numbers. If you start your own business, however, you must take on the art and the science. Don’t turn a blind eye to it; numbers can actually be fun if you frame them in the right way.

Numbers will tell you how many orders you’ve received, how many services you’ve rendered, and how much money you’ve made. Numbers will tell you how successful you are, and how much opportunity there is for you to grow the business you love. If you need to, reframe it so that it doesn’t seem scary. But make sure that when the money does indeed come, you know how to keep track of it.

3. Money in, Money out: If You Know, You Can Act 

As small business owners, we get it done. We move, we react, and we make it happen. Oftentimes, however, what we don’t do is plan.

The most successful businesses in the world are all planning ages ahead. When I joined Intuit, I learned that fiscal-year planning often starts six to nine months ahead of time! It was uncomfortable at first because I was only accustomed to reacting as a business owner. But planning will give you a better chance at success.

Is a big shipment coming up that will take a lot of cash? Do you owe a large payment within the next month? If you know, you can act to protect cash or make arrangements. It sounds basic, but oftentimes we’re moving too fast to take a breath to plan. Knowing when money is coming in and going out will make running your business a lot less stressful.

For many of us, doing the accounting and tracking finances was not one of the reasons we started our business. I get it! But it is a part of the job that can help you achieve your goals and fulfill your dreams.

So educate yourself on all elements of your business. Talk to other small business owners. Learn more about money management through the many articles here. And use products like QuickBooks to make cash flow and accounting easier. I’ll be cheering for you!

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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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