Guest blog: 7 tips to get the cash flowing for entrepreneurs

By Johnny Martin. Johnny Martin is Finance Director turned numbers coach to entrepreneurs.

Here are some tips to get the cash flowing!

1. While everyone tends to focus on the business budget, I believe it’s really important to have a handle on your personal budget.  So take a morning and work out what your personal burn rate is – and take a long hard look at your expenses as if you were your business.  Maybe there is stuff you can live without!
2. Have you been distracted with too many new business ideas?  Have you lost focus?  I heard Nick Roberston founder of ASOS say recently:  “no one goes bust through being too focused” So be very clear exactly what it is you do – it helps customers understand your proposition e.g. “ah Johnny – he explains numbers to entrepreneurs”.
3. Know the score – It’s a cliché but it’s still valid – you need to measure it to manage it.  If you are still running your business on an excel spreadsheet and word template, then now is just the time to look at online accounting system like QuickBooks.  Much easier to use than you might imagine and it will save you time – and time is money.  Plus easier if you get a tax inspection – all the data or audit trail as its called is on one place.
4. Documentation – More cash is lost through lack of documentation or poor documentation than any other reason.  If there are important agreements that aren’t in writing – get them in writing!
5. Sales forecasts – most business plan unravel because the sales target is unrealistic – usually not in the level of sales but how quickly it is assumed the business will ramp up.  Take a moment to look at your forecast – how realistic is it.  (and I am assuming you have a business plan?! And a cash flow forecast?)
6. IP – virtually every business is now dependent on its IP for competitive advantage – make sure you understand how this area works. If in doubt there are some great resources at the British Library.
7. Managing Working Capital – working capital is money owed to you by customers, plus money tied up in stock less what is owed to suppliers.  You can have a fast growing profitable business that comes unstuck because it runs out of working capital.  To avoid this have a cash flow forecast, manage your debtors but also your profitability.  Todays profit is tomorrow’s cash!

For more info – including details of his money / numbers workshops at the British Library Business & IP Centre  visit www.johnnymartin.co.uk  Johnny is also conducting a survey into financial knowledge click here for details