Cash flow and budgeting analysis is an important tool that can make or break the ability of a business to survive. Cash flow statements focus on the amount of money coming in and going out of a business, but also on the timing of transactions in order to minimize peaks and valleys in the availability of cash on hand. A budgeting analysis is a decision-making snapshot of the benefits, costs, and risks associated with potential expenditures and investments.
Cash flow and budgeting analysis is important for any business, but it is particularly important for those businesses that have just begun and for those that are thinking about expanding. For new businesses, cash flow and budget analysis allows the owner to see not only incoming revenue against outgoing expenses, but also the long-term chance of the business's success. Owners of new businesses need to understand early whether their business model and its associated markets have a good chance of becoming an ongoing concern. When first working with owners of a new business, we create two-year projections of your revenue and expenses in order to see whether your business has a substantial enough market for long-term viability.
Likewise, a business owner who is thinking about expansion needs to have a detailed understanding of how secure the business's current base of operations actually is. Expanding a business on a less-than-solid foundation can be courting disaster. Any business expansion entails some risk, but it should be a risk managed by an understanding that only a detailed budget analysis can provide.
At Grebb, Johnson, Reed & Wachsmith, our experience and expertise in cash flow and budgeting analysis can help your business gain a better understanding of the issues that need to be addressed to ensure future growth and prosperity.