Calculate your finances and be in control.
Why do it: quite often enterpreneurs will go bankrupt due to a poor cashflow. Managing cashflow helps you assess the coming cost/income in advance. It creates financial discipline and reduces risk. When you are doing this you are thinking broader, what’s going to come. This alone already gives ahandle on what you can expect. This forward thinking really helps.
Steps to take create your Cashflow Overview:
1. Start with Excel or google sheets (download here) to write down numbers
2. income – write your income (in your currency)
3. expenses write income per month
- taxes, website costs, staffing costs, expected incidental costs/expenses
- frequency
4. + funding (assess per month)
5. – withdrawals (assess in the future)
6. total +/- per month.
7. do it for 2-3 times.
and then write down numbers per month, try to get 1-2 years ahead.
Then it should should look roughly like this:
Calculate your ‘runway’
- Total money in the bank / amount you spend per month = # of months ‘runway’
At first, you will not get it quite right, but after 2-3 fill ins and rechecks, it becomes clearer. After a while, you will get a feel for this. This will help you get more thinking on what’s coming and how to handle it. We think is essential for your business. Also you need this for the bank. Getting to financial discipline helps you control your business and mastering your personal income.