Drop By Drop A River Is Formed: A Guide To Cash Flow


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Firstly, if you have set up your own business and created a product that consumers are interested in, congratulations! Don’t lose sight of how brilliantly you have done so far.  You have probably already encountered plenty of hurdles, some you will have lept over with no trouble, others may have been a little tougher to negotiate.  One of the hurdles you will meet over and over though will be cash flow.  

All companies, no matter the size, have cash flow issues from time to time.  Perhaps you have invoiced for work that is due next month, but have invoices coming in you need to pay now.  Maybe you’ve had an emergency within the business or you can’t meet demands so need to employ more staff or buy a vehicle.  The first few years of business are going to be your toughest so, we have a few ideas for keeping on top of your flow.


Essentials Only

When making purchases for your business you need to really focus on the bare necessities.  Once you have a good buffer in your bank then you can think about reinvesting.  The truth is there are always products or systems that could make our businesses work better, but they will be completely pointless if you run out of money before they increase your revenue.

If you are offering your services, perhaps a consultancy, consider what technology you really need.  Is the latest laptop or mobile phone really going to help you earn more, or could you make do for the first year?  It can be tricky if you are manufacturing as equipment will probably be costly.  Look into machinery hire or share with another, non competitive firm.  If you are working in the arts, consider starting off with pieces that cost you nothing but time.  Check out these handy ideas on Upcycling.  


Maintain A Cash Backup

As a startup you need to be prepared and expect a shortfall.  It’s the same in life, when you start a new project or health kick, the first few months are going to be tough.  Mistakes will happen and even with the best laid plans, life tends to drop a plot twist in the blink of an eye.  Surviving this situation all depends on how you traverse them.  Ensuring you have a cash reserve will take the sting out of the blow and help keep your focus on business growth.  

It can be hard to keep on top of a cash reserve, but one tip is to create your own zero.  So instead of seeing 0 as the point your company goes into the red, consider making £1000 your zero.  This helps ensure you don’t have to jump into your overdraft and place your company in debt.


Be Harder With Your Invoices

You run the business so you dictate the payment terms.  Instead of offering 30 days for payment of goods / services reduce that to 15.  Better still increase you Cash On Delivery or COD invoices or make your payment terms Due Immediately.  You can even add a daily interest on any overdue invoices.


When Disaster Strikes

Clearly young businesses are still building their foundations so if financial disaster happens early on, but you still believe you have something to offer you could consider borrowing.  Whilst there is a strong argument for not taking on debt, it is important to consider all options before giving up.  If you can, negotiate terms with your bank.  Look for incentives on offer through the government.  Have a strong accountant and financial advisor on hand and make sure you talk to someone close to you.  In a situation where you know you have money coming in soon, but your back seems against the wall you could consider on of the Swift Payday Loans but this should be an option you exercise with extreme caution and only after exploring all other avenues.  You also need to be absolutely positive you have the ability to meet the payments and have invoices due in.  


Offer A Discount For Early Payment

Ok so no one likes discounting their services however, cash flow is king and in the early years of business it should be taken in higher regard than profit margin.  Offer your customers a small discount for immediate payment as an incentive to get their cash back into your account.  

Whatever you do, make sure you talk to your family about any pressures you have.  This isn’t failure, it is a common issue in business and also, in life.  No one will believe in you like your partner, mum, dad or friends.  So keep talking and you may find you have more support than you imagined.






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