Keep the tap running.
Not literally, obviously. But you have to keep the cash flowing or you’ll go out of business. And managing cashflow isn’t the same as selling – many businesses who are selling well still come unstuck if the money they need to pay staff and suppliers isn’t in the bank when they need it.
In fact, managing cashflow is by far the most important function in any business, especially startups. Yet it is surprisingly common to see this area neglected or managed haphazardly.
Knowing all of your costs, incomings and outgoings now and in the near future is the best way to make sure your business succeeds. It isn’t exaggerating to suggest the intricacies of money in/money out has made many solid businesses come unstuck – even if they were selling well.
An ICAEW survey revealed that 58% of micro businesses (less than 10 employees) and 35% of small and medium-sized businesses (between 10 and 250 employees) had no debt. How do they can manage without borrowing? The answer is largely because of good cashflow management.
ADVICE FOR MANAGING CASHFLOW
- Know your current cash situation
- Regularly prepare and update cash flow forecasts
- Raise awareness about cash
- Think about your credit rating
- If you need finance, research them properly and allow time for the provider to make a decision.