Is it ever any different? Is it only during the bad times? Simple answer – the number one reason for business failure is a shortage of Cash. Any time. Good times and Bad. It is the King and Queen of Business Survival. Can profitable businesses run out of cash? Absolutely they can.
As promised, welcome to the first Fortnightly Focus – a short, sharp blast to maybe remind you, possibly surprise you, but essentially to help you in navigating New Zealand Business today. Some of you will know all of this stuff – in fact many of you will – but my question to all of you is: Are You Doing It? Are you taking the Actions? In these challenging times you Must! So first off, Cash.
What do you need to do to, what actions do you need to take, to ensure a shortage of cash does not bite deep – accepting that many of you are experiencing “some” cash shortage of varying amounts. The Actions:
As promised, welcome to the first Fortnightly Focus – a short, sharp blast to maybe remind you, possibly surprise you, but essentially to help you in navigating New Zealand Business today. Some of you will know all of this stuff – in fact many of you will – but my question to all of you is: Are You Doing It? Are you taking the Actions? In these challenging times you Must! So first off, Cash.
What do you need to do to, what actions do you need to take, to ensure a shortage of cash does not bite deep – accepting that many of you are experiencing “some” cash shortage of varying amounts. The Actions:
- Develop a Cashflow Forecast. A lot talk about it, many don’t do it! And not just a few weeks forward. Go for Months. If you find it difficult forecasting revenue, try harder. Spend more time on it. Time your costs, time your revenue, predict the shortfalls, do something about them before they happen
- Try to speed up your receivables. Send invoices when the job is finished or the goods are delivered. Don’t wait to the end of the month. Look at your Terms of Trade. Why do we all think 20th of the following month is a standard? Its not! Always remember the Squeaky Wheel Principle. It’s good business to be squeaky. I’ve known failed business owners who didn’t want to be “pushy.” It’s your money – follow it up, push for payment, squeak!
- Try to extend payment terms to your suppliers. I know that works against the action above as they may want prompt payment too, but negotiate, push, communicate, make arrangements
- Manage your Stock. Free up some cash, but not at the expense of sales. Sell your old and slow-moving stock, at a discount if necessary, so you can buy more faster moving, higher demand, good margin stock
- Control your Costs. Review your Overheads line by line – where can you make some savings? What do you spend money on that is not critical in increasing sales?
- Maximise Sales. Often forgotten but can have the biggest impact on Cash. Compete strongly, go the extra mile with your prospects, be Different, get noticed, thrash your thoroughbreds (your best salespeople) as they will be motivated by the challenge
We have a page on the Think Differently Website about Cashflow Issues – click here and remind yourself again!
In two weeks time another Fortnightly Focus on the second most important thing in business in New Zealand right now. I wonder what that could be>
Cheers
Phil Pickford
In two weeks time another Fortnightly Focus on the second most important thing in business in New Zealand right now. I wonder what that could be>
Cheers
Phil Pickford
