- Know & understand your cash cycle. From the time when you first have to pay out for a certain job / project to the date when you will receive money. This could be for stock, labour or any other direct costs until the time the project is completed and then the time it takes the customer to pay you. Understanding this will help you manage your cash much more effectively.
- Get your pricing right – you have a great product or service, but do you know how much that actually costs you? Do you know how much it needs to make to cover your overheads? Spend quality time getting this right, then revisit, revaluate and recalculate accordingly. Unfortunately, all too often I see business owners making the common mistake of completing this exercise at the beginning of a venture and months, even years down the line the same basis is being applied. Remember, if the business has grown, so too as its overheads…Don’t forget – revisit, revaluate and recalculate.
- Address your debtor’s book: I have mentioned in previous blogs, about the various payment methods available and the importance of implementing procedures before this becomes a headache. If you have a debtor’s book and there’s old debts on there, address and deal with them immediately. This is cash that should be sitting in your bank account.
- Be savvy with your spending – it may sound obvious but there’s a lot of good sales people out there selling things that you may not really need, offering ‘great deals’ on additional extras that may be available elsewhere for cheaper or even for free. Don’t rush or get pressured into purchasing anything, it doesn’t matter whether it’s a new car or stationary supplies – Research the product, ensure it meets your needs, what are the alternatives, compare prices etc. Be savvy and spend in the right areas on the things you need now but will save you in the long term.
- Manage your tax payments, a lot of small business’s scramble around every third month to meet their VAT liability, why? they’re fully aware when it’s due… Running a business is stressful enough, why add to it…Exercise good housekeeping, open a separate bank account and set aside money every month. The same with personal or corporation tax, manage them in advance and relieve yourself of that stress.