Cash flow is key to financial stability and so is keeping the expenses down. Initially a business will incur more expenses while setting up the office/warehouse/showroom, purchasing stock, getting equipment, marketing materials and so on. Following this flurry the sooner you can settle your expenses the better.
Get to know very early on what your regular expenses are and make sure they are in a schedule, use a diary on paper or online, use a spreadsheet, set reminders somehow – you can even download free software which will provide alerts for various things.
Once you know what the regular expenses are, see if you can reduce them in any way.
As a start-up you won’t necessarily have a relationship with your suppliers but it is essential to establish good working relationships early, buy regularly and pay on time, once you have established your credibility ask for discounts which could be based on the amount you purchase, the regularity and/or prompt payment. Most suppliers will be happy to oblige regular, well paying customers. You won’t know, if you don’t ask.
In the beginning, you absolutely must shop around for the best price, taking quality into account of course. Once you are established if your supplier won’t come to the party on discounts, then shop around, if your regular supplier becomes aware you are trying elsewhere, they may just change their mind, no-one wants to lose a good customer.
When starting out, the inclination will be to get everything bright and shiny and new but hand-me-downs can be just as good and much cheaper. Forget how you felt when you had to have used toys from older siblings, they probably worked just as well anyway.
Good financial advice is great and should be done before you start-up, when you get your business going and throughout the life of your business. It isn’t good enough to be in contact with your accountant once a year, maybe a health check with your doctor once a year is good enough, but to stay ahead, your business needs more regular checks. Your accountant has the skills and knowledge to alert you to possible tax breaks, new legislation which could be crucial and if they don’t, shop around for another accountant.
Shopping around for the best bank deals is also a great idea. Don’t just head for one of the big four, they may not have your best interests at heart, particularly if you are a small to medium business. Community banks, credit societies and similar will want your business. Maybe have a key account with a big four and other services with one of the others. Spread the joy.
Don’t carry too much excess stock, have enough for a set period of time, with some emergency material but do have a supplier who will ample stock if you need it. Reducing your inventory, reduces your costs. Unless of course you are offered an amazing bulk buy deal, just check it is all above board.
When purchasing if you can work with a central supplier for most of your needs, it could reduce shipping costs and increase the chances of discounts. Try to establish periodic invoicing as well e.g. once a month to reduce the paperwork and administration.
Become a “greenie”. There is satisfaction in reducing your carbon footprint and caring for your environment. Your customers will be impressed. And in a lot of instances you will save money. Sensor lights for areas not frequently used, using eco-friendly globes, become as paperless as you possibly can, recycle paper don’t just throw out a dud print, use it for draft printing or use it as note pads. If you provide drinking water for your staff, consider installing a filter – don’t have bottled water.
These are the “biggies”, more suggestions will follow next time.