Keeping an eye on your cash flow is one of the most important elements of running your own business. Spotting something is wrong early enough could help to keep your start-up alive. Follow our tips to keep everything running smoothly.
Too much stock
As a start-up founder, you might like seeing lots of your own product stacked high. But over-ordering and being lumbered with boxes of things you can’t sell is very wasteful. By forecasting your sales properly, you can work out how much stock you’ll need. You can always order more when the time is right.
Lowering prices to attract buyers can be a good way of luring in new customers - particularly with new offers. But if you’re discounting regularly, it could be a sign that your product, pricing points or marketing promotions aren’t standing up.
If you’re paying your invoices on time, but the money you’re owed isn’t coming in as expected, then you’re going to have an issue. It’ll likely have an effect on your own payments eventually, too, and could spiral out of control. It’s important to set payment terms with those you do business with and make other people stick to them. If you end up paying people through personal finances, then you really will have a problem.
High staff turnover
Recruiting and training new people to be part of your team can be expensive, particularly if that effort is going to waste. Follow our tips on recruiting people for your start-up.
Not being able to pay what you owe in tax is very serious. Founders should always remember that the income they get will always have tax implications. It’s a good idea to keep a separate tax pot aside ready to fulfil your legal obligations.
Detailed forecasting using apps or even simple spreadsheets can significantly help start-ups get a good grip on finances. Knowing what’s in your accounts each day and understanding what’s owed to you and what you owe is a good way to keep on top of things. You’ll then be able to flex your business muscles to do whatever’s necessary to continue to trade.
Download the Virgin StartUp business plan template to help you plan your start-up today.