This time last year, we delved into the topic of cash: mistakes to avoid, six ways to achieve healthy cash flow, and planning your cash flow projection. An interview with entrepreneur, Lisa Hackman Freda, of Sweet Grace Cake Designs, was the cherry to top off our week.
There is one thing that I’ve had to learn the hard way about having a business and that is cash flow management. Even I, someone with a good accounting background, has made some darn-right bad decisions with money. Most of these mistakes were a result of risks that I took with my business. I’m not sure if there would have been another way around it because I wanted to take a leap. This is what business ownership is about. However, I do wish I had put a better strategy in place… yes, you could say, I had been lax about planning this out.
There’s not a day that goes by that I don’t think of the most important lesson I learned in an accounting course in college. I can still remember the overhead transparency (yes, I’m that old) with the words “CASH IS KING” and the funny little clipart guy, with his cartoon face and balding head, holding a bunch of cash. At that time, my young naïve self thought, “well isn’t that cute and catchy? Of course cash is king.” But, REALLY… I had NO IDEA what that meant until I had lived a little… and owned my own business.
Just like you create a sales plan and an expense budget, you should have a cash flow projection. This should be your guide for the ins and out of cash. And, it’s a pretty simple projection:
CASH INFLOW – CASH OUTFLOW = CASH BALANCE
The first thing that struck me about Lisa Hackman Freda is her background: 20+ years on Wall Street! I thought, “This is someone that Sage Wedding Pros’ readers have to meet!” So many of us have fought careers of the 9-5 (or the 7-11)… we have dreamed of leaving our jobs to start our own business. A couple years ago, Lisa decided to make the big leap into the world of entrepreneurialism.. and she hasn’t looked back. Lisa, your gumption is an inspiration to all of us!