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𝗕𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝗕𝘂𝗱𝗴𝗲𝘁𝗶𝗻𝗴: 𝗔𝗿𝗲 𝗬𝗼𝘂 𝗣𝗹𝗮𝗻𝗻𝗶𝗻𝗴 𝗳𝗼𝗿 𝗚𝗿𝗼𝘄𝘁𝗵 𝗼𝗿 𝗝𝘂𝘀𝘁 𝗛𝗶𝗴𝗵𝗲𝗿 𝗦𝗮𝗹𝗲𝘀?
𝗬𝗼𝘂𝗿 𝗯𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝘁𝗮𝗿𝗴𝗲𝘁𝘀 𝟮𝟬% 𝘀𝗮𝗹𝗲𝘀 𝗴𝗿𝗼𝘄𝘁𝗵 𝗻𝗲𝘅𝘁 𝘆𝗲𝗮𝗿.
𝗕𝘂𝘁 𝗵𝗮𝘃𝗲 𝘆𝗼𝘂 𝗽𝗹𝗮𝗻𝗻𝗲𝗱 𝘁𝗵𝗲 𝗰𝗮𝘀𝗵 𝗿𝗲𝗾𝘂𝗶𝗿𝗲𝗱 𝘁𝗼 𝗮𝗰𝗵𝗶𝗲𝘃𝗲 𝗶𝘁?
For entrepreneurs managing businesses with an annual turnover of ₹5 crore to ₹500 crore, increasing sales and profits are two major objectives.
However, 𝗴𝗿𝗼𝘄𝘁𝗵 𝘄𝗶𝘁𝗵𝗼𝘂𝘁 𝗽𝗿𝗼𝗽𝗲𝗿 𝗯𝘂𝗱𝗴𝗲𝘁𝗶𝗻𝗴 𝗰𝗮𝗻 𝗰𝗿𝗲𝗮𝘁𝗲 𝘀𝗲𝗿𝗶𝗼𝘂𝘀 𝗰𝗮𝘀𝗵 𝗳𝗹𝗼𝘄 𝗰𝗵𝗮𝗹𝗹𝗲𝗻𝗴𝗲𝘀.
𝟭. 𝗦𝗮𝗹𝗲𝘀 𝗕𝘂𝗱𝗴𝗲𝘁 – 𝗣𝗹𝗮𝗻 𝗬𝗼𝘂𝗿 𝗥𝗲𝘃𝗲𝗻𝘂𝗲
Consider a Chennai-based manufacturing company with an annual turnover of ₹100 crore, targeting ₹120 crore next year.
Where will the additional ₹20 crore come from?
Identify potential customers, expected sales and payment collection timelines.
𝗛𝗶𝗴𝗵𝗲𝗿 𝘀𝗮𝗹𝗲𝘀 𝗮𝗿𝗲 𝘃𝗮𝗹𝘂𝗮𝗯𝗹𝗲 𝗼𝗻𝗹𝘆 𝘄𝗵𝗲𝗻 𝘀𝘂𝗽𝗽𝗼𝗿𝘁𝗲𝗱 𝗯𝘆 𝘁𝗶𝗺𝗲𝗹𝘆 𝗰𝗼𝗹𝗹𝗲𝗰𝘁𝗶𝗼𝗻𝘀.
𝟮. 𝗘𝘅𝗽𝗲𝗻𝘀𝗲 𝗕𝘂𝗱𝗴𝗲𝘁 – 𝗨𝗻𝗱𝗲𝗿𝘀𝘁𝗮𝗻𝗱 𝗬𝗼𝘂𝗿 𝗖𝗼𝘀𝘁𝘀
Increasing turnover requires additional purchases, manpower and operating expenses.
Plan these costs carefully, considering when payments must be made and the credit period available from suppliers.
𝟯. 𝗖𝗮𝗽𝗶𝘁𝗮𝗹 𝗕𝘂𝗱𝗴𝗲𝘁 – 𝗣𝗿𝗲𝗽𝗮𝗿𝗲 𝗳𝗼𝗿 𝗘𝘅𝗽𝗮𝗻𝘀𝗶𝗼𝗻
A Coimbatore manufacturer planning higher production may require additional machinery, warehouse space or infrastructure.
𝗘𝘃𝗮𝗹𝘂𝗮𝘁𝗲 𝗰𝗮𝗽𝗶𝘁𝗮𝗹 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁𝘀 𝗮𝗻𝗱 𝘁𝗵𝗲𝗶𝗿 𝗳𝘂𝗻𝗱𝗶𝗻𝗴 𝗿𝗲𝗾𝘂𝗶𝗿𝗲𝗺𝗲𝗻𝘁𝘀 𝗯𝗲𝗳𝗼𝗿𝗲 𝗰𝗼𝗺𝗺𝗶𝘁𝘁𝗶𝗻𝗴 𝗳𝘂𝗻𝗱𝘀.
𝟰. 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗕𝘂𝗱𝗴𝗲𝘁 – 𝗙𝘂𝗻𝗱 𝗬𝗼𝘂𝗿 𝗚𝗿𝗼𝘄𝘁𝗵
As sales increase, more money gets blocked in inventory and customer receivables.
Prepare monthly cash flow projections to identify additional working capital requirements and potential shortages.
𝟱. 𝗕𝘂𝗱𝗴𝗲𝘁 𝗥𝗲𝘃𝗶𝗲𝘄 – 𝗠𝗼𝗻𝗶𝘁𝗼𝗿 𝗮𝗻𝗱 𝗖𝗼𝗿𝗿𝗲𝗰𝘁
Compare actual performance against budgets every month, or at least quarterly.
Identify deviations, review cash flow and take corrective action before problems escalate.
𝗧𝗵𝗲 𝗞𝗲𝘆 𝗧𝗮𝗸𝗲𝗮𝘄𝗮𝘆
𝗕𝘂𝗱𝗴𝗲𝘁𝗶𝗻𝗴 𝗶𝘀 𝗻𝗼𝘁 𝗷𝘂𝘀𝘁 𝗮𝗯𝗼𝘂𝘁 𝗰𝗼𝗻𝘁𝗿𝗼𝗹𝗹𝗶𝗻𝗴 𝗲𝘅𝗽𝗲𝗻𝘀𝗲𝘀.
𝗜𝘁 𝗶𝘀 𝗮𝗯𝗼𝘂𝘁 𝗽𝗹𝗮𝗻𝗻𝗶𝗻𝗴 𝗽𝗿𝗼𝗳𝗶𝘁𝗮𝗯𝗹𝗲 𝗮𝗻𝗱 𝘀𝘂𝘀𝘁𝗮𝗶𝗻𝗮𝗯𝗹𝗲 𝗯𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝗴𝗿𝗼𝘄𝘁𝗵.
𝗕𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝗼𝘄𝗻𝗲𝗿𝘀:
𝗕𝗲𝗳𝗼𝗿𝗲 𝘀𝗲𝘁𝘁𝗶𝗻𝗴 𝘆𝗼𝘂𝗿 𝗻𝗲𝘅𝘁 𝘀𝗮𝗹𝗲𝘀 𝘁𝗮𝗿𝗴𝗲𝘁, 𝗮𝘀𝗸 𝘆𝗼𝘂𝗿𝘀𝗲𝗹𝗳 —
𝗶𝘀 𝘆𝗼𝘂𝗿 𝗰𝗮𝘀𝗵 𝗳𝗹𝗼𝘄 𝗿𝗲𝗮𝗱𝘆 𝘁𝗼 𝘀𝘂𝗽𝗽𝗼𝗿𝘁 𝗶𝘁?
𝗖𝗔 𝗦𝗮𝗶𝗹𝗲𝘀𝗵 𝗕𝗵𝗮𝗻𝗱𝗮𝗿𝗶
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