Your business’s future is represented in a business plan. That is basically all that there is to it. It should contain the business goals that your company is looking forward to meet, a little bit about the product or service you plan to serve to the consumers and also who they are.

Even if you write down your business’s future on a scrap of paper it is if not the final but the germ of the final draft.

Business plans complete a lot of tasks for the writer and the reader of the business plan. An investment seeking entrepreneur uses it to seek investors; a firm may use it to attract employees etc. Thus, the importance of a business plan is unimaginable.

The business plan must convey across, clearly, the goals of your company and how you plan to achieve them under what financial limits and how. While you do this, as it contains a lot of mundane facts and figures the only way you can grab attention is to sound impressive.

The business plan may be divided into three parts. These are; the business concept; the marketplace section; the financial section.

In the business concept section, you write about your organization, the service you plan to provide and how. In the market place section you discuss the potential buyers or customers, who are they and where also why you choose them.

You also describe your potential customers here. In the last, financial section you include the income, balance sheets, financial ratios etc. You may seek help from your accountants here.

A business plan, depending upon what you are using it for can be of various lengths. Typically it can be of about 20 pages in length. This isn’t a norm though. The length is decided by the purpose.

Your cash flow is the lifeblood of your business. You can be billing thousands of dollars each month but if it takes your clients 30-90 days to pay, your cash flow can be non-existent – particularly if you have expenses to pay while you’re waiting for clients to pay you.

Your cash flow, and your cash flow analysis, is your number one tool to keeping your business solvent and thriving. Fortunately, the basic elements of your cash flow are really straightforward. The equation is:

Starting cash

Cash in

Cash out

Ending cash.

Pretty easy, right. It’s like balancing your checkbook. If you keep a spending plan or budget, these numbers are tracked for you on a weekly or monthly basis. Good cash flow management enables you to predict the state of your future finances, and daily management makes it easy. It makes creating a business plan, and modifying your plan, possible. It enables you to answer the question “What will your cash balance be six months from now?”

Here are just a few tips to help you stay on top of your cash flow:

1 Deposit all checks/payments you receive immediately.

2 Invoice frequently and change your payment terms to 15 or 30 days.

3 Collect receivables within 60 days.

4 Experts also advise using prenumbered cash receipts and checks for easier management.

5 Lastly, pay your own accounts slowly. Of course you don’t want to be penalized for late payments, but push it as far as you legitimately can.

When you know what your past, present, and future cash balance is, you can create an accurate business plan. Let’s take a look at two aspects of a business plan and how your knowing cash flow will help you:

Marketing Plan. Marketing generally costs money. When you know exactly how much money you have now and can accurately predict how much you’ll have six months from now, you can with relative certainty create a marketing schedule that meets your needs. For example, let’s say you want to produce a brochure this month, have a direct mail campaign the following month and then release a new product and a corresponding promotional campaign. Knowing your cash flow can help you get a head start on planning these campaigns because you will know what you have to spend.

Operational costs. Many of the costs of doing business are fixed costs. However, choosing to outsource a project or several tasks means you need to be able to pay a contract employee, and paying employees means you need to have a solid grasp of your cash flow. If you don’t it could mean being unable to pay someone for a job they’ve been hired to do.

As you can see, knowing your cash flow has a significant impact not only on your ability to do business, but also on your ability to plan your business. And as any business person knows, you don’t just wing it in business, you need a plan.