By Chloe Thomas
Creditsafe
Have you ever been in the situation where you’re sat in your office wondering ‘where is all my money going?’ It started off great; you had a plan, a team and the funding to start your own business, but now six months down the line your cashflow is starting to struggle. What can you do? Does everyone starting their own business go through this? The answer is probably yes. Most new businesses take time to find their feet and get into the flow of running their own business, so take a deep breath and stay positive. There are good and bad points when you first start off and throughout the running of your business for that matter, however there are some things you can do to try to get your cashflow on the healthy track.
The first thing you need to ensure is that you are getting paid, consistently and in the full amount. As cash is king this may be an obvious priority for a business, but so many businesses go unpaid for long periods of time, meaning they lose out on massive amounts of money and allow their cashflow to be severely disrupted. There was £12,567,889,275 worth of debt in the UK last year alone, so keep on top of your finances and make sure more money is coming in than going out if you want to make a profit. Your cashflow should be your main priority in terms of running your business, you need to protect and nourish it. Many businesses hesitate to enforce a cash collection service or get legal advice when owed money, but if you are having continuous trouble with certain customers who are refusing to pay you, there are various options available to you. You can use a cash collection company or appoint a solicitor to chase your debt for you, or you could do it yourself starting with debt chasing letters. Creditsafe offer Debt Chaser, a letter sending service that chases your debt for you. So if you need a bit of guidance, you can choose from a range of different templates and control how often the letters are sent out.
Now that you have taken care of the money coming in, maybe now is a good time to monitor what is going out. There will always be out goings for a business, even if it’s just for the office alone. Bills will always need to be paid to keep the business going, but you can control these to an extent. If your cashflow is struggling and you find yourself with less money that you would like at the end of the month; cut back on luxuries. For example, if you have an office in the most expensive part of town, move to a cheaper location. Or if you are paying out for all the latest equipment and software for your office, you could downgrade if it’s not essential to your business. The biggest tip we could give is to live below your means when a business is struggling with cashflow.
Once you have established where you could potentially be losing money, it’s time to build it back up. Hiring the right people and having the right team around you could double your sales if done correctly. Take your time when hiring. Hiring managers have admitted that one in five of their team shouldn’t have been hired in the first place- so don’t rush into it. Spend some time figuring out the role you are searching for, and what that role entails. Think of the kind of person you want and what qualifications you want them to have. Be very specific in your job advert, and be picky in interviews. Make sure you choose people who will care about your business and work to the standards you expect.
Once you have consistent money coming in, controlled money going out and the right team behind you, you can then focus all your efforts on to getting the right business. Doing business with a company that will consistently pay you and not cause you any trouble is arguably hard to find. Credit checking is a very secure way to check that a business is creditworthy enough to do business with. A Creditsafe credit report will give you an over-all score of 0-100 of creditworthiness; taking into account their whole credit report. It will also offer you the company’s credit limit, director information, key financials and any adverse CCJ information. Choose to check the summary page and have all the key details of the report grouped together for you or alternatively you can delve right into the report and check their financial report going back over the previous five years. Always credit check potential customers before approaching them to do business; either find them yourself or use Creditsafe’s Marketing Prospects which gives you a previously vetted checked lists of potential customers.
Don’t let your business spiral out of control, ask yourself these key questions and know where your money is going in your business.