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.
The earlier business leaders learn the importance of cash management and cash controls within their business the more likely I think they are not to fail at the too oft repeated fall when the cash runs too tight.
In the early days of 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 based on trust to delegate your own basic financial knowledge to anyone within your company managing your money. Madness – be assured you 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 cahs flow due to deasonal business demands or simply high growth success.
I cannot imagine how painful it must be t close a company because the owner is successfully selling their great product to the point of collapse. Better sell less, more profitably, better know where you stand and how the sales impacts the profit and when the cash comes back in rather than die a death due to overtrading in early times when a limited track record makes any investment too costly or simply not sensible for the outside party.
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.