Depending on the strategy for managing money in a business, you can get a stable or unstable position for the company: the more you spend, the less stable your financial situation, but the more opportunities to scale. If you save a lot, you will not be able to develop and earn less. Therefore, it is necessary to find a middle ground and understand how to create and, at the same time, maintain financial sustainability.
Financial planner in VDR
A payment calendar is a tool that allows you to plan business income and expenses for a month. This will help you understand whether you should save or try to scale. The payment calendar template can be downloaded from the link.
In the first column, write:
- Categories of income from all sources of business.
- Types of expenses: rent, taxes, salaries of employees, payment to suppliers.
The next columns are the decades of the month.
By subtracting expenses from income, you will see the payment amount at the month’s end. You can adjust the gain and costs plan if this amount is negative. At the end of the month, compare the plan with the actual amounts; you will receive reserve amounts or a cash deficit. See the link for an example.
It is important to pay everyone on time. In addition, this will create a good reputation for suppliers, customers, and employees.
Planning investments in VDR
Investment costs are the money you invest in a project. For example, the purchase of the necessary equipment or the cost of a training course for employees. It is important to understand how investment costs are justified. For example, consider whether it is worth buying an expensive laptop if you only need it for paperwork. And is it worth repairing the office if you just opened a business and rented an office for a year? Treat property with care; if possible, try not to throw it away but to repair equipment.
Reserves and investments are an important component of stability
A reserve in business is necessary for unforeseen situations. Having a reserve to cover three months of expenses (salary + rent). This stock should be easily accessible. All cash surpluses fall into the reserve. Only having collected a reserve in case of force majeure situations can you think about investments.
Organize spending categories in the virtual data room
You need to divide your business expenses into three categories to get started.
- Expenses you can’t do without. For example, buying coffee for a coffee shop.
- Expenses without which earnings are possible, but in a smaller volume. For example, paying for a second barista to extend the operation of a coffee shop.
- Expenses that do not affect the business. For example, a car for the head.
In business, there are also such items of expenditure as a delegation of authority or investments in advertising. Before spending money, ask yourself the following questions:
- How much are these costs necessary for my business?
- Will I be able to earn more by spending this money?
For example, consider whether the amount earned will exceed the cost of outsourcing when talking about delegation of authority. If not, then you need to abandon this idea.