Cashflow is king – business advice from the Phone Box Millionaire Stephen Fear
ONE of the things often ignored by entrepreneurs is the importance of cash flow. Profit is clearly vital in the long run but unless you manage your cash flow your new business may not be around long enough to see any profit! Cash is often quoted as King, but if that is true then Cash flow is its Queen.
These two ‘royal’ musts need a close marriage if any enterprise is to survive start-up and evolve into the major employer of tomorrow.
Making sure you sell whatever goods or service you’re offering is essential but making sure you get paid for those goods or services afterwards is paramount. If you don’t you haven’t only lost the profit, you have lost the cost of production, delivery, marketing and a whole myriad of other expenses too.
Make sure you invoice early and don’t let your customer overrun his or her payment terms. Honest people or companies intend to pay so will not be bothered that you have asked them to pay quickly, especially if you explain that you are a small business and need to get the cash in. Don’t be afraid to ask because most will pay up and you will maintain that all important flow into your coffers.
Business is essentially quite simple. It’s a matter of selling your goods for more than you paid for them, including any associated costs. In my experience most new businesses that go wrong do so for one of two reasons. Firstly, by assuming that all the money received is there for the owner to spend, and secondly, because they never researched the market thoroughly enough before they started spending money on exploiting it.
In many instances newly created businesses find, after they have started spending money, that there is no market! Or perhaps that the competition is too stiff.
Always research any market you are considering entering thoroughly. Not just on the web either. Go into your local library where a huge amount of information awaits you, often accompanied by professional librarians who will direct you to just what you need. One of the best things about the library service is that it’s a free. A genuine national treasure in my opinion.
Stephen Fear was brought up on a Bristol council estate and ran his first business from a phone box. As well as a successful businessman, he is entrepreneur in residence at the British Library.
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