by Bob Salvas, contributing writer
The period in late October is supposed to be scary as we all celebrate the Halloween season. But, for the average small business owner, the entire calendar year can be scary!
What is the small business owner most afraid of? No, it is not vampires or werewolves or witches. The research shows that businesses are mostly worried about cash flow. And probably for good reasons. It is a fact that almost half of small businesses fail due to cash flow problems. And when you add in the fact that 77% of small business owners use their own money to start and grow a business…. Well, that pressure can quickly add up to FEAR!
“Never take your eyes off the cash flow because it’s the life blood of business.” -Richard Branson
Even a company with good cash flow will worry about the uncertainties in the world and how the wrong circumstances could derail their business. Are they prepared for a big piece of equipment breaking? Or a key employee getting sick? Or a financially strapped client who puts off paying them or maybe not paying them at all? Not to mention the uncertainties of competition, inflation, or massive technology changes.
What can be done to make this LESS scary? Let’s look at three things to consider:
START OFF CORRECTLY– People fall in love with their own business ideas and plans that are in many cases too optimistic and too fast. You shouldn’t wait until everything is perfect because that time never comes. But you should make sure you have cash reserves or a backup plan in place before taking the leap of faith. Starting your business part-time while you are still working for someone else is a good transition to business ownership as well as having a supportive spouse who is employed and able to keep the benefits and the household afloat during potential slow times (and there are ALWAYS slow times!).
KEEP EXPENSES TO A MINIMUM– There are some expenses that you will NEED to make. If you are a local business, it is essential that you have a Google Business Profile, a decent website, and high qualify business cards. You don’t have to have gold foil business cards or a website that would make Amazon jealous, but they MUST be done by a professional rather than by you or someone who does it for a hobby. After that, spend some time on social media and at networking events to drive people to your new website for more information about your company. Billboards and other advertising options, including flyers for your business are not essential in the beginning and there are many options in the advertising world that probably feed more of your ego than your pocketbook- let’s be honest.
Also, your office space does not need a lot. Working from home is a good option for many in the early stages of business. And if you need a place to meet clients, you can always join a local CO-WORKING space. Your home office only needs to have the basics like a laptop (plugged into good internet service) and maybe a copier/scanner. A table can be your desk, or you can pick up a used or old desk and chair for short money.
KEEP AN EYE ON THE MONEY-Lastly, you must constantly look at your numbers. Make sure you have a healthy profit margin as many new businesses are afraid of appearing to charge too much for their products or services. Healthy margins will help with keeping your cashflow strong.
Also do what you can to get your clients to pay early. You can even offer them an early paying discount (if you have that healthy margin!). Make sure you invoice right away and keep on top of slow payers. Use digital invoicing to speed up the process.
Conversely on the accounts payable, work on terms with your suppliers. Do not pay invoices early and if you are running up against being late, reach out to those you owe money to. Communication goes a long way to maintaining good relationships and that can help you manage that ever-elusive cash flow.
NOTE: There are three big annual events that take place in the month of November that local small businesses should support and/or participate in.
All will be excellent networking opportunities for small businesses.
Bob Salvas is a Professional Development Manager for the RI Builders Assn, (ribuilders.org) a marketing consultant, the co-founder of Brew Work Networking (brewwork.org), and the co-founder of THE MARKETING CAMP (themarketingcamp.com), a yearly conference to help small businesses achieve success.
Bob can be reached at 401-359-1602 or at bob@bobsalvas.com.
The post Business Monday: Being in Business can be Scary – Bob Salvas appeared first on RINewsToday.
