“Can the business afford it?”

“Can the business afford it?” Here’s how to answer that question.

We business owners, we tend to make spending decisions based on what is in the bank account right now.

If it feels like there’s enough in the bank account we spend.

If it feels like there’s not enough, we don’t.

And ‘feel’ is the important word in there.

But that’s just the amount of money that’s in the bank account today.

It’s not what might be in the bank account later, after you’ve spent the money.

So we have two options really.

We could spend the money now and maybe we go broke when we hit a quieter period later.

Or we don’t spend the money and we miss out an opportunity that could grow the business, hit our goals, have a sense of progress.

So instead of using the bank balance, I’ve got another idea for you.

Don’t use the bank balance, use a cash flow projection.

A cash flow projection is a tool that’ll show you what your bank balance will be in the months and weeks into the future, probably six to twelve months from now.

So you can more confidently spend now, knowing what your bank balance is gonna look like later.

Like my clients Kevin and Jen, they went from $300k a year in revenue to over $3 million a year, on a pretty aggressive growth trajectory, because they could confidently spend more and more on ad spend and inventory knowing that they weren’t gonna run out of money later.

So if you want to know whether your business can afford something, use a cash flow projection.