Whether your business is growing or struggling, managing your cash flow effectively is absolutely essential, and for many, the very key to business survival.
The problem is the lag between the time you have to pay your operation costs & suppliers and the time your customers pay your invoice.
What is a working capital?
To put it simple, a working capital is the money you need for the day-by-day running of your business, calculated as the current assets minus the current liabilities.
It may come as a surprise to you but according to the Small Business Development Corporation of Western Australia, only a very few new businesses are profitable as soon as they open their doors. It takes a long time to reach your break-even point and start making a profit. Just because a new business has customers and the till is ringing, it doesn’t mean that a business has a healthy working capital.
Why do I need to create a budget?
Creating and using a budget is a valuable tool for every business, not just for those who need to closely monitor their cash flow because money is tight. What are the benefits of a budget you are asking? Well, here are just a couple I would like to mention.
A budget helps you keep your eye on your long term business goals. It also ensures you don’t spend money that you don’t have. It helps you to prepare for financial emergencies. It also sheds light on bad spending habits and it gives you peace of mind.
How can customers pay me?
One of the major problems is that you are waiting for customers to pay your invoice. This delay in receiving money is the main factor why businesses experience cash flow problems. The key to fix this problem is simple. ‘Make it easy for your customers to pay you’.
From internet payment solutions to EFTPOS terminals, you need to offer options that make the payment process easy for your customers. This also includes strict Terms & Conditions to ensure you are getting your money, preferably with the purchase.
I need new customers but I don’t have the cash to invest
Is your business living off the same customers? Relying on existing customers can be a trap. While it is important to keep existing customer relations alive, a business needs equally a consistent flow of new customers. However, what if your cash flow doesn’t allow you to spend money on attracting new customers?
Look at your marketing strategy, especially your digital presence and start getting savvy about it. Maybe all you need is a quick refresh, a couple of marketing campaigns, competitions or new posts to grow your business and increase revenue.
Save yourself time & money and engage an experienced business consulting firm like Synergy Consulting Australia to take the stress out of the entire business growth process. We provide a large range of business consulting services, which includes Legal, Accounting, Marketing, Project Management & Migration services. This also includes a full market research and feasibility report before investing. www.synergyaustralia.com.au
Synergy Consulting Australia is led by Ilona Solinska. Ilona has over 15 years’ national and international business consulting experience. She has coached hundreds of businesses in the area of Marketing, Finance, Legal, Compliance, Operation, Change & Project Management and is a highly sought after presenter on a wide variety of business topics.