The issue of cash flow is one that many small business owners fail to address until, in many cases, it is too late. According to CBInsights, the post-mortem it conducted of 101 failed startups revealed 29 percent didn’t make it because of cash flow related problems.
The new ‘What If’ business modeling feature from Palo Alto’s LivePlan is aimed at avoiding that predicament by helping your small business with forecasting scenarios so you can better understand the financial health of your business.
With ‘What If’, Palo Alto says small business owners will be more accurate when they are considering and preparing for worst/best case scenarios; comparing against competitors by region, size, and industry; managing revenue based on employees, profits and spending; and initiating best practices for financial management.
The need to consider these scenarios periodically is important because it lets you see how you fare against your competition, plan for seasonal rush, as well as how your growth will be affected with the implementation of the JOBS Act in December.
The Benefits of Cash Flow Forecasts
As Sabrina Parsons, CEO of Palo Alto Software, explains in a release announcing the new feature, “Quite often, small business owners fail to realize that fast growth — while a ‘best-case scenario’ — creates an increased pressure for cash, and often requires a small business owner to be prepared with additional financing. That’s why we created ‘What If’ scenarios: so owners and advisors can prepare for both the best and worst, to ensure the business stays afloat.”
LivePlan has also added seven new metrics to the benchmarking platform to deliver better insights. Business owners can now compare productivity metrics such as, monthly revenue per employee, monthly net profit per employee and cost of marketing spend compared to industry standards.
When these data points from these metrics are integrated with the ‘What If’ scenario feature, it will give business owners the ability to make informed decisions to keep their company on the right track, while at the same time showing them what they can do if it is not.
The new ‘What if’ is targeted especially at small businesses that cannot afford CPAs and financial advisors on a full time basis to keep track of their financial health.
LivePlan is a business planning and small business management solution with a set of tools that have tried to simplify every step in the business plan process. From idea to business, it helps with pitching your business, testing the numbers, tracking the planning process and more.
It is extremely important to keep in mind, unresolved cash flow problems will eventually result in your inability to stay in business. For small business owners, this is generally caused by lack of financial expertise or experience, because they may not be able to identify problems and more importantly to solve them.
By getting a heads-up of what might take place, you can make informed decisions, whether you do it on your own or with the help of solfware features like “What If” or a professional.