When starting a business its surprising how much outlay there seems to be! Think solutions to your purchases, its not just buying a computer or printer - the type of advice required should go further. When do you buy a server and why, should you bcome a limited company and so on.
Keep your cash and utilise a funding source for your capital purchases. Keep these purchases away from your bankers, this will give you an extra line of credit that is specific to the asset.
We cater for new businesses and we are able to recommend associates who can save you money on future purchases
Yes leasing can be great for smoothing out cash flow long term too, and in the case of IT equipment can be tailored so everything is replacement on a predetermined schedule so there are no big suprises or cash outlays.
Good advices. Cash sure is king and you should manage it as best as you can, especially when launching a new business. It's hard to tell what you're gonna spend your next fortune on as there are many unexpected expences.
In my experience, a lot of businesses take on unnecessary outlays when starting up. It's easy to get carried away with branded stationery, websites, office furniture, dedicated phone lines, software and more. In fact, most of these things are nice-to-haves which can be purchased as your business grows.
One of the best advise given to me when I was first starting out was don't spend unless you really need to. Every spend needs to either bring you revenue or save you revenue in the long term, anything else in the beginning is superfluous. This was great advise because it is so easy to think that creating a business is about having the ideal software, websites, letterheads etc, but 3 years later I still do not have printed letterheads nor need them.
Consider signing up for Bartercard, so you can pay for your new business expenses using Barter pounds rather than cash instead. You can then sell your spare capacity for Barter pounds as well.
One of the best advise given to me when I was first starting out was don't spend unless you really need to. Every spend needs to either bring you revenue or save you revenue in the long term, anything else in the beginning is superfluous. This was great advise because it is so easy to think that creating a business is about having the ideal software, websites, letterheads etc, but 3 years later I still do not have printed letterheads nor need them.
Welcome Binh. Please do post an intro and tell us about yourself and your business.
I agree. Cash is king. If you don't understand cash flow then you run a serious risk of your business going bust - even if it's a very good business otherwise.
I know someone who runs a good little business but during any discussion we'd had about business, it became very clear to me that she didn't understand the concept of cash flow. I kept trying to spell it out to her, but she insisted that she had plenty of cash flow. Actually what she was talking about was the amount of money she had invested in her business, which - as you all know - is entirely different from working capital.
Well, the inevitable happened. A let down B, so B let down C... The result was that she appeared at our door ashen-faced because the whole lot was going down the pan if she couldn't borrow a substantial sum within a couple of hours. I didn't really want to lend it (money there was no way we could afford to lose) but sometimes what can you do? Fortunately it's mostly been paid back now but after the stress she put us under I swore "never again". I'm still not sure she understands cash flow yet, though.
After 20 years in business, it always amazes me how many businesses fail to understand the difference betwen turnover and cashflow. Outside of the financing model, there is a FREE way to enhance your cashflow which is too often overlooked.
Our Guide to Credit Control for SMEs is based on real-life scenarios and can be downloaded from our website Business Funding Portal
Within the financing model, there are many different products (including bank loan, overdraft, equipment finance, invoice finance, through to angel/VC finance). Each product has its own set of benefiits and pitfalls; to chose between them on cost alone is as sensible as selecting your IT infrastructure on cost alone!
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Cash is King
Fortunately it's mostly been paid back now but after the stress she put us under I swore "never again". I'm still not sure she understands cash flow yet, though.
