You will have heard the saying that cash flow is king. People say it all the time. You probably nod along in agreeance, but how much do you really do to manage your cash flow effectively?
Without money in your accounts, you can’t pay your bills… or yourself.
And without an understanding of your business’ financial position, you don’t know what you have available to invest in growth.
That is why it is important to manage your cash flow effectively in your adviser business. You can do that by monitoring your incomings, having a budget and a forecast, and taking advantage of the resources at your disposal.
Let’s look into those points in a little more detail.
Monitoring Your Incomings And Outgoings
The first step to managing your cash flow is understanding what is currently happening with your money. Take a good hard look at your incomings and outgoings.
Incomings: Examine your income sources, the time of the month you receive payments in, and if they arrive in your account on time.
Outgoings: Where does your money go? Look at all the things you spend on. Note down the essential ones and the ones you could potentially reduce. Also, get a good picture of the time of the month that payments go out.
The basic premise of good cash flow is to have money in your account when your bills need to be paid and some left over for profit.
Sometimes getting the dates to line up can be tricky. For example, if all of your bills are due on the 20th of the month, but you don’t receive your income until the 27th, then there may not be enough money in your account to cover the bill payments.
So, how can you fix it?
Have A Budget And A Forecast
A budget is a key part of any business strategy and you should definitely have one in your adviser business. The term ‘budget’ has some negative connotations attached to it. It conjures up images of penny pinching and not having much money available.
A business budget does not mean that at all! In fact, a business budget is a simply a financial plan that includes the revenue and costs for your business. Writing the numbers down into a budget template can give you a really good picture of where your adviser business is at. You obviously want your incomings to be more than your outgoings. You can ensure this happens by monitoring your Profit and Loss statements and by auditing your expenses.
Your P&L statements can show you the areas you are spending and what generates the most income for your business. Monitoring it can help you to keep your spending in check and develop the areas that are generating the most revenue.
Let’s face it, it can be tempting to spend on the things that you think will benefit your business. But sometimes the expense is not necessary. Especially when you consider the things that Newpark have available for you.
Use All Resources At Your Disposal
When you are part of the Newpark adviser network, you have a number or resources at your disposal. These resources are not only useful for your business, but they can save you a lot of money also. Take professional development for example. Training courses can cost a lot, but Newpark offers multiple opportunities for professional development throughout the year that you can utilise as part of your membership.
Marketing is another area that can really chew through your budget. Logos, flyers, business cards and other marketing material can run into the thousands. Newpark also offer you some marketing material and marketing grants in some circumstances.
Not only that, but the networking, information sharing, problem solving and support that Newpark offers, provide tremendous value to individual business people. They are a way to tap into the benefits of a larger organisation while still operating as a sole trader.
If you would like to know more about how Newpark can help to grow your adviser business, then get in touch with us today.