Meet the expert panel
This month’s action plan
Best practice checklist for ensuring you have sufficient cashflow to sustain business growth
For each item on the checklist mark it as: completed, not applicable for your business, or high/medium/low priority for action.
Your business best practice checklist from Martin
Managing cash flow is one of the toughest parts of being a small business owner. Between ongoing operational costs, late payments and unexpected bills, it’s sometimes challenging to meet your financial commitments.
You need to carefully manage the following:
1. Stay on top of your costs: Keep on top of your expenses by knowing roughly how much you usually spend on regular bills (marketing, couriers, etc.) so that you’ll recognise an unexpectedly large charge straightaway. You should also review operating costs like power, internet and phone regularly to ensure you’re getting the best deal.
2. Take inventory regularly: Taking a strategic approach to inventory management will allow you to avoid the costs associated with poor stock management. Using an inventory management system, monitoring inventory levels regularly and undertaking a physical stocktake that will allow you to stay on top of your stock levels and ensure you’re not carrying excess stock.
3. Keep on top of invoicing: Efficient invoicing is a must for small businesses looking to maintain a steady cash flow. You should send your invoices as soon as possible, be clear on your payment terms and follow up on unpaid invoices as soon as they become overdue.
4. Have a documented debt collection process: A structured approach to invoicing will only be effective if it’s supported by a clear debt collection process that’s actually followed. Late payments can put a considerable strain on your cash flow, so it’s essential that your customers understand that you have a consistent debt collection process. You will act if they haven’t paid on time and if not settled you will take the matter to an external collection agency. Set expectations early in your dealings with new customers – many will see what they can get away with when they’re dealing with a new supplier.
5. Manage expansion tightly: Many successful small businesses run into serious cash flow problems when they’re growing quickly. While strong growth is a good thing, it carries risk and requires significant effort to ensure it’s well-managed.
Sustainable growth requires considered and consistent investment – you should have a clear strategic plan for returning profits to the business or seeking external funding.
6. Have a plan for emergencies: Cash flow shortages are often difficult to predict, particularly if they’re caused by a large unexpected expense or uncharacteristically slow payment from a major customer. You should always have a plan in place to access additional capital if you need it or build up a reserve funds
Your business best practice checklist from Dheeraj
• We have got a documented system for all areas of our business
• The processes we use are automated
• The system we use provide meaningful data (management & compliance)
• The systems are robust to handle growth in volumes
• We use Key Performance Indicators from our system to review and manage performance
• Our systems work without much intervention
• We cost our product and service offering regularly
• We review these systems regularly
Your business best practice checklist from Frances
1. I have clarity on the foundations (values, activity, outcomes) that I am looking to grow from
2. I am a good at sharing this foundation story and using this to lead growth
3. I have these foundations documented and use them to onboard new clients and people
4. I have a systemised routine by which I stay in contact with existing clients to maintain and grow the value we offer them
5. I have a methodology to collect and use client case studies and testimonials to help us grow
6. I have a clearly thought through, documented and regularly executed referral program.
7. I deeply understand the value that clients get from us through their journey. At the start (why they engage), during the first delivery (to show that we give what we promise), as they stay with us (to maintain and grow the value for all parties).
8. I understand and have documented the Value Tree on which my company is built that covers me, my staff, my clients, my suppliers and others in the community.
9. I know the value ROCKS on which my company value is built and how to protect those as we grow.
10. I have regular reviews with stakeholders in my business as I grow so I can map the changing landscape and maintain my focus on giving value.
Your business best practice checklist from Greg
• I have automated all areas of my revenue generation and collections process that should be automated and personalised the rest.
• Debtor Management is seen as an opportunity in our business to further help our customers and generate more business for us.
• I have the right mix of reoccurring and one-off revenue to maximise cash flow
• I use technology to expand my value proposition to my customers, increase efficiencies and profitability and improve my cash flow.