BUSINESS BETWEEN THE LINES
Any brave souls who have taken the leap to start a business can appreciate that behind the shiny façade it ’ s actually just a lot of hard work , sweat and tears . It ’ s often complex and all-consuming – demanding much more from us than we ever anticipated .
The perplexities are only made worse when you attempt to navigate through the murky waters between money in [ revenue ] and money out [ expenses ]. It ’ s at these moments you ’ ll find yourself asking a critical question - “ how can I take this business from good to great ” or in fact “ how can I keep this business going at all ”?
An ASIC report released some time ago revealed the shocking plight of a newly launched business . It concluded that 60 % of businesses will fall over in the first three years . ASIC went further to identify the culprit - astonishingly 44 % is due to poor strategic management and 40 % is linked to poor cash management .
This glaring survey indicates new business owners have an urgent agenda - to get engage strategy and firmly manage cash flow . This will hugely impact the likelihood that a business will survive the 3 year mark .
You may have heard the phrase ‘ cash is king ’. That is true because , in most cases , without cash the best ideas can easily be extinguished and so to manage business ‘ between the lines ’ is to protect your cash flow .
Once perfected , a delicate balancing act of revenue and expenses will ultimately ensure your expenses don ’ t eat away at your cash flow . It requires a confident understanding of what a good business does and what a great business does – a constant seeking to be strategic with cash flow .
How does this playout in the marketplace ?
An entrepreneur I knew was passionately pursuing his business vision and had a refreshing point of difference from his competitors . Gradually gaining market share , his business was turning over a comfortable $ 400,000 annually . Sounds great right ? Unfortunately , he was accomplishing this at the sake of cash flow . Collecting a debt of $ 300,000 in its first 2 years , the business was fast becoming a statistic .
Careful review between the lines revealed the true consequence of over spending , poor communication and insufficient strategy around cash flow . The owner had created the perfect storm and now had only two options : close the door or seek help to create cash flow strategy .
Choosing the latter , Number _ 2 were approached and were able to put forward an uncompromising solution . Solid methodology and strategic direction saw continued revenue growth of $ 1.2 million and cash flow functioning as it should to impact the debt .
In outsourcing the cash flow management , the owner was freed to once again pursue sales and ensure the strategic vision of his business was kept intact . Game on !
I challenge you to take a health check of your business and see if you are strategically managing your cash flow !
AUTHOR Josh Goulding DIRECTOR , NUMBER _ 2 CONTACT 0413 977 197 WEBSITE yournumber2 . com . au
50 Women ’ s Network Magazine