Keeping Your Finances Under Control
When a business hits a phase of rapid growth it often finds that cash doesn’t keep up and they are at a loss as to why. Here’s my top areas to keep track of to keep control of the cash:
Increased sales will mean increased customers and if you offer payment terms then there is a risk that you start to let these slip. Make sure that you have clear payment terms and ensuring that you stick to them and enforce them is key. Remember, a customer is not good if they don’t actually pay you!
If you have a stock based business then as you grow you will need to increase the levels of stock that you hold to make sure you can fulfil the orders. However, there can be a temptation to over-stock. Just because business has doubled doesn’t necessarily means that you need to double the level of stock held!
Regular reviews of the stock held and the time it is held for are recommended, having enough stock for 6 months worth of sales isn’t necessary if you can get it delivered to you in 48 hours!
When business is good, the “short arms, deep pockets” mentality you have had to buying things for the business has gone out the window, shiny things are suddenly grabbing you attention.
Basically stop and think .. do you need it and does it benefit the business? Yes, that all singing, all dancing top of the range laptop might be nice to have, but you have you have the cash to splash and does it add value to the business? If your laptop is dying a death then yes, it needs replacing, but does it need to be this one?
Focus on spending the cash where it is needed and where you will get a return.
There suddenly aren’t enough hours in the day, you need help and you need it fast. There may be the temptation to take on staff and take then on fast, but is this the right step? Are they the right people or the first people?
I always recommend that you sit down and make a list of everything that you do and critically look at what it is that you actually need to do and what you are doing that you don’t need to do or you hate doing. This should then give you a list of tasks that you can look to delegate, i.e.:
- Packing and posting orders: you could get someone in for a few hours a week to do this for you or look at a fulfilment warehouse service
- Admin: a good VA is worth their weight in gold, they can organise your inbox, deal with customer service, sort out all your admin
- Social media: do you need to do your social media or can you delegate to a specialist marketing agency who will get you, your brand and your message?
- Bookkeeping and accounts: do you need someone to pick up to the day to day bookkeeping to keep on top of all the receipts etc.
Once you have this list, then you can look to see if you need to employ someone or look to work with a freelance team who offer you the exact help and services that you need.
Do you have up to date financial information at your finger tips? Does it give you the reporting information that you want and need? Now is the time to look at putting systems in place so that you can review the performance of the business on a monthly or quarterly basis. This will let you make meaningful decisions and help you move from being reactive to proactive.