Is it time to look at what you could do to expand, by looking at your business plan and preparing new cash flow forecasts. Keep in mind that you should take a positive outlook on things and see things how you want them to be rather than how you don’t want them to be.

Think about getting yourself a mentor for 2012 – most people who mentor do it for free because they enjoy it!

Happy Christmas and a prosperous New Year from in-business blog, Russell Bowyer.

I acheived this by applying some of the 7 ways to grow a business and, just in case you are reading this and thinking turnover is all very well, it is not just about turnover, as within this larger turnover figure, I have increased prices also (sometimes by 40-50%) to make the business more profitable also.

I am looking at putting together a business seminar on how firstly to go about buying a business and then on if you have one, how to grow it by applying the 7 ways to grow a business and will be titled ‘Success in business’.

If you are in the UK and are interested in these business seminars please post a comment on this article or email me at info@in-business.org.uk.

Good luck with your business in the present economic situation.

The vast majority of business failures is down to bad cash flow, if not all failures for that matter!

If you want to run a good business and a successful one at that you must keep an eye on cash flow. Whilst profitability is important, profit is no good to any business unless the money you invoice to your customers is collected in full and in time!

Forget balance sheets and profit and loss accounts if you are not accounting minded, but get to grips with your business cash flow. If you lose control of your cash flow you will lose control of your business either to the bank and or the receiver/liquidator!

If anything, with most new ventures the cash flow is over optimised. It is always worth while being realistic when planning cash flow for your business.

These words are probably stating the obvious, but they are worth writng, as many a time the business owner (whether new or established) take their eye off the ball. So what was a promising venture becomes a statistic due to a lack of control over the life blood of the business – CONTROL CASH FLOW!

What can and does happen, and in particular with new businesses, is that the company over expands and the cash flow does not keep up with the businesses expansion. The new business is having to buy new stock to keep up with demand, but the customers are either not paying on time or the new business is not chasing it’s customers hard enough to pay! So although the business is showing a healthy growth and profit, there is not enough cash flow (or working capital) and the business faulters or fails!

Many a time when a business is in this situation, the business owners turn to factoring of the debt. However, be careful with this solution! Once you have factored your debtors you are into higher cash costs and it is almost like selling your sole to the devil! Don’t get me wrong factoring has it’s place and I have considered it’s use many a time, but be very careful with it and try where possible to look at how to get out of it as soon as possible.

In a start up situation the other factor that is almostly certainly under estimated is how much working capital a business needs. Working capital is the amount of cash needed to run the business and is the difference between the highest balance in your bank account and the lowest balance in your account (or if you have an overdraft facility, the highest point in your overdraft facility). To be sure your business is successful your working capital should also include a buffer over and above the above difference. The amount of this buffer is entirely up to you, but I would suggest at least 25-50% extra, if possible!

Don’t be an ostrich! Never bury your head in the sand when things are going wrong, always act right away. Make sure you have a good credit controller in your business or where possible don’t offer credit. There are many ways to get your customers to pay without letting them have credit, for example, I am a great believer in getting customers to set up a standing order or if your business is big enough a direct debit (banks will not normally allow you to set up a direct debit facility until your turnover exceeds somewhere between £2-5 million).

Some must do’s in business for good cash flow:

– Always make sure you meet your payroll, if you don’t pay your employees your business will faulter!
– Always keep your existing customers happy, don’t just focus on new business.
– Always collect your debts on time and consider reducing the credit period given to your customers to as low a period as possible or even to a zero period by introducing standing orders or direct debits.
– If your customers are not paying and bad debts are on the increase, review your customers services to see if all is well with the products or services you supply.
– Always pay your suppliers and tax bills on time- please note that the Government puts more businesses into liquidation than any other organisation! So always pay your tax on time!

Finally, make sure you plan your cash flow by producing a cash flow forecast yourself or by employing a good accountant to do it for you.

If you are a “Non-accountant” and want an easy way to produce a cash flow forecast then click this link: “Cash flow forecasts made easy”

So we want to hear from you – your successes and your failures – the details of what you did right in business and where you went wrong. All the gory details please!