Cash Flow Planning and Profits for Startups

Planning and Profits for Startups

Any business start-up requires high-level planning and every aspect should be considered before starting a business but only if you wish to make it a huge success. On similar grounds, Planning Cash Flow, as well as profits for startups, is very essential. However, Cash Flow Planning and Profits are generally misinterpreted and are considered to be one and the same thing. But you need to understand that they are two very different things. Described below is the general definition of the two financial words along with how you should plan a strategically good plan action for startups in terms of cash flow and profits.

While one can explain cash flow as the total amount of money which is transferred to a business ( in and out) which also affects liquidity, profit can be explained as the amount of money a company saves or makes a certain deal or project. Basically, it's the amount you save after every expense is covered and everyone is paid. Profit is mandatory for any company, it may be on a large-scale or a small-scale. It anyhow increases the ranking of a company.
This planning can be easily included while planning your business plan. Cash flow planning and cash flow statements are one tricky part included in financial planning. One, therefore, needs to clearly understand how cash flow works, Putting it in simple words, cash flow can be considered as the amount of money you take and give. Now it's important because we need a balance between the give and take a statement, you cannot give more than you take. Or maybe you cannot have more output than input or you simply will go bankrupt. Therefore, a startup needs a careful planning of cash flow so as to run it successfully. Of course, it's quite rough at the starting but who says that starting up a business is easy, one simply should not be scared of failure. Your Cash flow statements should be simple and very clear. There should be no lagging in the daily inputs.
As a startup, cash flow management is very important for the survival of the business. You can say that startups are kind of vulnerable to cash flow statements and hence planning should be done on the practical and realistic basis. Including self-applied strategies and it should also include the profit of the customer otherwise customers will never be attracted and hence the whole essence of the planning will go completely waste.
Now profit planning is interrelated to cash flow planning, if there is a proper cash flow management without any doubt the company will see a profit, if not, then it's time to change your strategies. Startups mean experimenting while strictly keeping in mind the interests of a customer.
Maintain a cash flow forecaster which includes the expected shortfalls and customer payments. It will also help to deal with banks and similar organizations also helping to fill taxes on time. It may happen that due to some unexpected issues the forecast imbalances, it may be due to higher costs of some raw material or lower sales rate or maybe customers not paying up on time. In such situation, experience is required and for startups, this turns out to be a big hurdle. For startups, you can always take the help of company registration. As always, Play smart!

This article has been contributed by Simmi Setia, Content Writer at LegalRaasta, an online portal for GST Software, GST Return Filing, GST Registration, Section 8 Company Registration, Nidhi Company Registration, IEC Registration, Fssai License, File ITR Online.