Whether your goal is to accumulate assets to generate future cash flow or support your current cash needs, developing a cash flow strategy should be an important consideration when creating your wealth plan.

Cash is the life-blood of any business. A business can show profitability, but without cash it can still fail. Rapid growth, while good for profits, causes major challenges with cash flow. If your business is growing rapidly, is seasonal in nature, or in a state of decline, it is imperative to forecast cash flow to ensure success.

The sooner you get a Strategic Plan the sooner your business and team will be able to help you build your vision and take your business where you want to go.

For any business, especially a smaller company or startup trying to secure their footing, cash flow is one of the most important measures of financial health. It allows you to keep up with debt payments, helps to build a better leverage of buying power, and provides you the capability to make investments into your company’s future growth. Just as the old saying goes, “cash is king”.

Cash flow is also one of the key ways to assess your business and potential leadership tactics, and well as being a great measure for valuation. For these reasons, it’s hugely important to use strategic planning as a way to determine an accurate estimation of your company’s future earnings and expenses.

Basics of Strategic Planning

Strategic planning can be useful in all aspects of a business, but is especially helpful you are trying to manage your cash flow. By making projections and decisions based on past trends and customer demographics, you can take a proactive stance in managing your organization. This insight into your likely future results is commonly planned on an extended, three-to-five-year horizon, and results in the long-term development and implementation of new business strategies.

Cash Flow and Sales Forecasting

When it comes to managing cash flow, you’ll most often find strategic planning taking the form of sales forecasting. Forecasting, easily one of the most common types of strategic planning in any business, is a method for establishing estimated sales levels over a certain period in the future, whether that time-frame is a week, month, or entire year. In most companies, estimated sales figures are used as the basis for nearly all other types of forecasts and budgets. They’re used to determine important decisions like:

• how much raw supplies to purchase in order to meet demand
• how many sales managers to hire in order to effectively handle anticipated volume
• how large of a marketing budget you’ll have for developing and driving new business

Sales forecasting is mostly just making an educated guess at what he future holds, taking into account previous results, growth trends, seasonal variations, and a host of external market and economic conditions.

Using Strategic Planning to Improve Cash Flow

The key to using strategic planning in your business in order to improve cash flow is to truly understand the various forces at work and the way that they affect your organization. Some of the major steps to take are:

•Knowing the effects of your different product lines and current strategies
•Identifying the people accountable for your results and including them in the forecasting process
•Setting important performance measures that can be accurately tracked at different intervals
•Understanding the risks and opportunities that are likely to present themselves during the projected time frame
•Keeping track of results regularly, and making adjustments to forecasted future figures as needed
•Holding the appropriate parties responsibly for both revenue and overall cash flow results

Sales forecasting is one of the most important aspects of running a business – whether it’s a small one-person startup, or a large multi-national corporation. Accurate forecasting figures are instrumental in managing, and staying on top of, your business’ cash flow. By using strategic planning in your sales forecasting process, you can better equip your organization to be prepared for the future, and be in a strong position to react to changes as they happen.

Aim for positive cash flow vs. negative cash flow. Positive cash flow is when your business has more money coming in than it needs to pay bills. Negative cash flow is when your business is spending more money than it takes in that is, cash outflow is larger than cash inflow.

Author's Bio: 

Tracey Fieber helps business owners simplify, automate, and grow their businesses and their lives. She believes in the power of hiring the right people, and helps her clients cultivate highly effective teams that allow them to focus on the work about which they're passionate. By nurturing business owners' strengths and holding them accountable for their own success, Tracey's leadership, communication, and coaching techniques help her clients take massive leaps forward.