If you’re on the verge of launching a new business or in the early stages of steering a startup to safety, you may be aware of the fear-inducing statistics. Nine out of ten new businesses fail, with cash flow problems often being the most common cause. If you’re eager to succeed, it’s essential to keep the cash flowing. Here are some tips to keep your accounts from running dry.
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Adopt a management strategy from day one
When you’re running a new business, you may feel like you’re juggling several different tasks at the same time. While it’s beneficial to multitask, spreading yourself too thin could increase the risk of mistakes and oversight. If you’re focused on trying to sell products or market your business, you may not be paying enough attention to the money going in and out of your accounts.
To prevent cash flow problems, it’s important to adopt a money management strategy from the outset. Ensure that your books are in order and that you understand exactly what’s going on at any given time. If you’re not an experienced accountant or you don’t have an accounts team, enlist the help of a company that offers bookkeeping services. This way, you can keep track of invoices, monitor your outgoings and prepare in advance. If you’ve got an expert taking care of the accounts for you, this frees up your time to focus on the tasks in which you excel.
Set payment deadlines
Running a business isn’t a popularity contest, so try and avoid being the nice guy or gal and giving your clients a free ride. Establish payment deadlines from day one and track down outstanding invoices. You may find it difficult to take the hard line, but at the end of the day, you’ve got a company to protect. You need to make money to stay in business. If you don’t receive payments on time, this could affect your ability to pay suppliers or staff members, and this will put the business at risk going forward.
Lower running costs
If your books don’t make for pleasant reading, reduce your running costs while pushing sales. If you’re spending too much on wages, wasting money on marketing methods that aren’t working, or you’re forking out for unnecessary expenses each month, tighten your belt and identify more efficient ways of working.
Plan ahead
In business, things can change in the blink of an eye. Don’t rest on your laurels and assume that everything is fine just because your accounts looked good a few weeks ago. Keep a close eye on your income and outgoings and plan ahead. It’s particularly important to think about the weeks and months to come if you run a seasonal business or if your income fluctuates.
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If you own a new business, you’re probably aware that it is incredibly difficult to stay afloat. If you’re keen to avoid hitting the cash flow barrier, apply these tips and stay focused on what’s most important.
