Don’t use your bank balance as a barometer
How are you and your business weathering the storm so far?
Some business owners I’ve spoken to recently have surprised me by telling me that they and their bank balance “seem to be doing okay…”. They typically say this quite quietly and with that trace of trailing uncertainty at the end.
Their tone additionally suggests that what they’re really thinking is: “It’s not anywhere near as bad as I was expecting. What’s all the doom-mongering about?”
They go on to tell me that their bank balance looks okay at the moment. And then the penny drops…
Please don’t fall into the same trap of using your bank balance as a barometer for the health of your business. Because it doesn’t work like that.
Will it look quite so robust when you have to pay both that deferred VAT bill and your current liability? When costs continue to drain out of your business, furlough support ends and a pipeline of new income fails to materialise?
Smart business owners know that looking purely at their bank balance can give them a false sense of security. You’ve got to look forward at all times – but especially now.
Years (and years!) of experience have proven to me the ongoing importance of forecasting. And the value of that can never be underestimated. So if you feel you’d like some friendly advice about this, please get in touch and we can have a chat – no strings, just sensible and useful support!
Download our ‘Simplified scenario planning template’ to better understand how things might shape up for your business and create a cashflow forecast that covers different potential outcomes.
You can also take advantage of a FREE 30-minute call with one of our commercial Financial Controllers to talk through your scenarios.
Keep well and keep safe,
Jennifer Raines, YRH Founder
We’re passionate about doing what we can to help you get through these challenging times. Visit our SME Financial Support Resource Centre – where we aim to provide the latest updates and information on Coronavirus and your business.