How to grow your business (part 3)
Cash is King
This is the 3rd post in our 10 part series. You can catch up with the other articles here . In this series of posts we are looking at how your business can be prepared when the economy starts to turn around.
In this post we look at cash and how to keep hold of it.
Most businesses fail not by failing to make a profit, but by running out of cash.
Never has this been more true than in the last couple of years when banks have not extended overdrafts or granted business loans. So never has the time been right to look within your business to see what opportunities exist to generate cash – start by looking at:
Who owes you money?
Make a list of who owes you money and rank that by how long the money has been outstanding over due date. At the top of the list should be the oldest debt.
Start calling them and ask for payment.
Be cautious of accepting new work until they have paid off outstanding debts.
How much stock are you holding over and above that required to meet in hand orders?
Will your stock last longer than the time it takes to get new supplies based on average sales?
Do you need to hold a sale?
Who do you owe?
Who do you owe money too?
Can you delay payment or renegotiate payment terms?
Look at your cost base
Are there any costs that don’t directly add value to the business.
Tell your workers or team what’s going on and why and ask them for ideas.
As the economy starts to turn, some businesses will run out of cash and go to the wall. Having cash will enable you to buy stock or equipment cheaply, or even their business, which in turn will grow your business.
So, what do you think?