Business Startup - What's The Biggest Single Threat To Your Success?
First things first, I’m a qualified Accountant who works in Insurance, now I know what you’re thinking and I’m not expecting any invites to Christmas parties!! However, I do know a thing or two about developing a successful Business Startup as well as the associated Business risk.
Of course there are hundreds of financial issues from PR, HR, EBITDA, GEARING and many more abbreviations to shake a stick at and I know that people study for years to get to grips with these issues as I have, but you don’t have to.
The Best Entrepreneurs Grow Businesses They Don’t Manage Them
99% of the people I know who run their own successful business didn’t think, “Eureka, I want to start my own business, I’ll go to University and learn how to do that”. They had an idea, made it happen and learnt along the way.
The dirty little secret, as always, is that a lot of the things you need to do are common sense but most people can lose sight of these once they get lost in their business.
It wasn’t long into my career that I came across the number one process that new businesses need to get good control over to ensure they have the very best chance of success.
Getting The Cash
Not necessarily how do you get it, as I would hope that if you were to set up a business you would have a decent idea of where the sales were coming from but how to make sure the business has enough cash reserves to operate effectively to maximise the return on that cash.
Increased Sales = Profits Right?
Almost everybody I come across focuses on sales, “The more sales we make the more money we make right?” Well no, more sales doe’s equal more income, but it can also lead to higher costs and also how do we know we are getting the cash for these sales?
Late payments and outstanding accounts receivable have been named the most common causes of cashflow crises in the UK and it isn’t difficult to understand why. In simple terms if you are doing the work and not getting the cash this inevitably is going to eat into your reserves and eventually lead cash running out.
This can affect any entity from your start up landlord or small business owner to a large multinational. The difference being that the speed of the impact will increase the smaller the entity is, not to mention the larger the entity the more likely it is to have access to funding such as bank loans etc.
What’s The Solution?
So how can a business get that cash in and stop wasting our time chasing the cash (yes, us finance chaps do have other things to do!). Well that’s simple get paid as soon as possible but at the very least let’s get paid on time.
If You Don’t Ask You Don’t Get!
In the first instance let’s get paid before we do any work through getting a deposit or advanced payment. Like Vistaprint, you do the design, make the payment to them, they print it and deliver it to you. The result no need for chasing debtors as they don’t have any.
If we can’t do that lets get payment on delivery. “Would you like to pay by card sir” or “Would you like us to put you in touch with our credit provider”.
Making these key activities part of your sales process will make a huge difference, most sales people tend to think the deal is done once they have the order “We’ll send you an invoice”, but it needn’t be that way!
When You Do Need To Provide Credit
Inevitably on some transactions you will need to provide a period of credit, so if we cannot do the above lets chase our debt effectively, and these are the simple steps I would take:
If you are proactive, communicate clearly and keep a record of everything, you will be well on the road to getting that cash in and more importantly not losing it!
FREE Business Insurance Review
At Insync Insurance we see ourselves as business partners as well as a business insurance broker. We offer modern digital servicing combined with great personal and dedicated advice which will support and protect your business.
You can compare landlord insurance or business insurance prices online via our website. Alternatively you can book a review with one of our expert gurus at a time that suits YOUR diary, where they will take the time to understand your individual business and tailor a policy accordingly so that you only pay for the cover you need.
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About the Author
I’m passionate about family, sport, technology and business.
In fact, I have always been fascinated by business, whether it was running the school tuck-shop or my Saturday job in the local store, I was always looking for ways to improve or view things differently.
I have enjoyed an amazing career fast approaching 25 years in the insurance industry, which has given me real insight into the challenges and opportunities faced by SME businesses in today’s ever-evolving marketplace.
I co-founded Insync Insurance, to offer companies a new way to buy and manage their business insurance. A synergy of digital servicing and personal expertise - utilising the latest technology to enhance relationships, not to replace them.