Fearlessly Frugally – Tips for Managing Cash Flow
A top contender for the most common issue experienced by small businesses is cash flow, or the lack of it, as the case may be.
Growing a business costs and although increased demand from customers may seem like a good indicator that things are going well, it is wise to proceed with caution.
It’s good to talk
Ideally, most small businesses will look to achieve growth in revenue by either improving their top line, through generating more sales, or by improving bottom line figures, through cost reductions. Both come with pros and cons.
Generating more sales often requires greater working capital for a number of reasons; purchasing new equipment, hiring extra staff, marketing or increasing inventory for example.
However, as many small business owners can testify, this is often easier said than done, and the task of finding suitable lenders can be an uphill struggle. With the added risk of acquiring debt that the business simply cannot afford in the long run.
Implementing costs saving measures such as finding cheaper suppliers, reducing staff numbers, consolidating space and other operational adjustments can seem like a saving grace. However, it is important to recognise that this too comes at a cost to the business. Whether in terms of increased workload for remaining employees, poorer quality supplies / customer service or less space.
The route taken to achieve growth naturally varies from business to business. What seems like the right thing to do for one company may not be ideal for another. Deciding the best course to take is a matter of planning and sound advice from a trusted source.
A penny saved is a penny earned
Many of the problems associated with obtaining suitable funding for growth can be attributed to lack of experience or trading history, poor planning, lack of financial constraints or management leading to a poor credit rating.
A common mistake made by many businesses, is the lack of strategic planning designed to maximise outputs, income generated and assistance to build cash reserves for inevitable rainy days. It can be tempting to think that because you have built your own empire from scratch advice is not necessary, or that debt finance is mainly required when working capital is at an all-time low. However, in truth lenders want to see that a business has a sound financial background, management infrastructure and constraints in place to ensure its sustainability. Therefore prioritising the need to accrue funds to facilitate growth or act as a contingency in challenging times is advantageous.
In other words, that fact that a business has managed to save some money works in its favour.
How we can help
As responsible finance providers, here at Newable we understand the needs of the businesses we serve, and the difficulties faced by many small businesses looking to grow in the UK. That is why our unique blend of advisory, lending and accommodation services for businesses, have been carefully crafted to address a broader range of requirements than many other traditional and non-traditional lenders.
Our loan funds are not only designed to provide affordable lending solutions for business, but with each loan also comes an entire year of business mentoring to help make your plans for growth become a reality. This means that guidance, support, information, signposting, advice as and when needed, is just a telephone call away.