Cash. Flow. The two little words that can make or break a business in one fell swoop. In short, cash flow is the lifeblood of a business - if you don't have money moving through your business, then you probably don't have a business. Every business has times when cash flow is awesome - you can easily pay suppliers, creditors and yourself and put some into your rainy day fund. You go to sleep without a money worry in the world. And then there are times that if you're not careful, cash flow can be really, really tight. Businesses have crumbled with frightening quickness without good cash flow management. Forecasting is important. Splashing out on that fancy new camera just after Christmas is probably not a good idea if the first quarter of your year is the leanest. Yes, even if it is in the sale. Your suppliers winning you over with an amazing bulk deal is all well and good, but can you afford to keep stock sitting in your storeroom for 6 months when it should be used to be paying your tax bill?
I'll admit, managing money isn't really one of my strong points by nature, and it's something I have to work on every single day with Crown and Glory to improve. For myself, and the business. There have been times where the money heading out of the business is threatening to unbalance the equilibrium, and here are a few tactics I've come up with to make sure we're not heading into the red in the past.
- Review your subscriptions - keeping up to date with your industries best magazines and journals is only good value for money if you have the time to read them all. Reduce that rainy day reading pile and cut back to your top 3 titles. Same goes with digital subscriptions. I took a look at my Paypal and iTunes automated payments recently and reviewed whether or not I actually needed everything that was on there. 1/3 got binned, saving the business £25 a month which might not sound like a lot, but those small payments add up!
- Evaluate your useage of materials - can you cut fabric more efficiently? Batch produce to save on your consumable materials (ie things like paint, glue and thread)? Give yourself the challenge one day this week or designing a new product from your material wastage.
- Credit cards should not be feared! As long as they’re managed properly, anyway. Buying expensive equipment and spreading the cost over your interest free period can really help ease a bump in cash flow. Credit cards are available in anything from 30 day to 24 month interest free periods. While you don't want to get into the habit of regularly buying materials and stock on credit cards, if you have a large order or event coming up, again it can help to spread the cost. Just make sure you read the fine print, stick to the payment terms, and only borrow what you can definitely afford. And no, ASOS is not your stock. Sorry.
- Reassess terms with your suppliers. Are you a loyal, regular customer? Then ask if you can have a discount. Don't ask, don't get! I'd always suggest phoning and speaking to someone over emailing here - scary, yes, but it's statistically more successful to get what you want over email. Be friendly, courteous and a little bit cheeky if needs be. Blag your way to savings!
- Look at your logistics. This probably only applies if you rely on postage to make your sales like we do, but when over 1/3 of monthly outgoings can be on shipping, you could make big savings by shopping around. Royal Mail business customers save 10% on listed shipping prices. The Post Office Drop and Go regularly have promotions and deals from a percentage off the listed prices to free credit over a certain spend. There's a rise in independent shipping companies too - could you find a cheaper way to send your overseas wholesale consignments?
- Have a good old clear out - spend a day dedicated to sorting through all the old stock you haven’t updated in ages and have a sample sale, or spend a day bulk listing unwanted supplies on eBay or Etsy and have a destash. My rule of thumb is that if I haven't used something in 6 months, I'll probably never use it, so back it goes.