Cash is King

Having and keeping your staff is great but without a steady cash flow your company will not survive, One of my early hires was an accountant. However before that there was just me and as I was building my company I looked at the amount in our bank account every day; I would always know what was owing and what was due, and I controlled the cash to the point of filling in my own VAT return for the first three years.

In a small start-up company I cannot recommend more highly the power of making your own computer or penciled entries. Bought ledger, sales ledger and controlling accounts all the way through to the first cheque I wrote for HMRC remains with me and has stood me in good stead. It is simply not acceptable to just delegate managing your money to someone in your company based on trust, its utter madness – be assured you will and can open yourself up to any number of surprises.

Take very seriously indeed the saying that turnover is vanity, profit is sanity and cash is King / reality. Then continue to take this point seriously all the way through the management of your company always thinking ahead, building a relationship with alternative funding sources as you look ahead to new growth and stretched cash flow due to seasonal business demands or simply high growth success.

I cannot imagine how hard it must be to have to close a company because the successful selling of a product has led to the brink of collapse. Its better sell less, more profitably, it’s better know where you stand and how the sales impacts the profit. With constant profits expansion can be planned and when the cash comes back in the company can be a long term success rather than short term glory.

Too many company owners fail, not because they do not have a good product, a willing team, nor good customers but simply because they run out of cash to support growth.

Top tips

  • Know how much money is in your bank account every day!
  • Think ahead – where is the next financing coming from?
  • Know how sales impacts profit.

About the Author Lara Morgan

Lara Morgan is best known for growing Pacific Direct, from start-up to successful exit, 23 years later. She now invests her time in fast growth companies and represents UKTI as an Export Ambassador, having previously exported to 110 countries. Her vast experience and business knowledge includes specialisms in licensing luxury brands, manufacturing toiletries and selling to the hospitality environment through complex global distribution chains. She's also an expert in leadership and developing talent having learnt through her own experiences of employing 500 employees in an open fast growth sales culture.

follow me on:

Have Your Say...