Overtrading

The double-edged sword of cashflow management. A huge influx of orders is fantastic, but a huge expense on inventory? Less so. Making a large expense before you receive a return puts you at risk of overtrading. This could be anything from late paying customers to large investments in operations/infrastructure without enough incoming revenue.

How can you fix this problem? Generally, reducing your expenses until revenue has been collected is a good place to start. However, investments are the lifeblood of business growth, so by no means is this reason to always play it safe. If there’s a risk that this decision may be too big too early, it’s worth investigating in other options. Sometimes this can be renting equipment or space until you have enough revenue to buy-to-own, especially when you’re still climbing the ladder and expanding. Equally, making good payment terms with your suppliers and customers should be on your must-do list.

How can we help? Using our scenario modelling tech and pairing it with your forecast data, we can map how different variables and investments will affect your cashflow. We can model the best, worst and middle outcomes and help you assess the feasibility and likely outcome of any choice.

Staff retention

It’s always sad to see a member of staff leave, but you’d probably be surprised about how upset your bank account is. Although the figure can change drastically throughout industries and business sizes, the cost of hiring an employee can stack up far more than just a salary. This is not to mention to loss of experience of your previous employee.

Increasing employee initiatives and standards can be a worthwhile investment to keep your employees happy and retain good staff, in order to keep recruitment costs down. Moreover, you’ll get much happier employees – a benefit in itself. We can specifically monitor your average hiring costs to help you keep an eye on the numbers and figure out when it’s time to make a change to your on-boarding programme.

Client dependency

Having regular clients is a great opportunity to give your business a foundation of frequent work. Building relationships with these customers can be a pleasant experience and the mutual benefits are undoubtable. However, financial dependency on too few clients leaves you walking on a tightrope.

Yes, you can encourage and entertain your clients, however, if they do leave the reason may be out of their hands, let alone yours. For example, the company may find itself making cutbacks during a time of financial instability, or a change of leadership leads them to choose someone else’s service. These reasons are entirely out of your control, no matter how great your relationship or your services.

The likelihood is that growing your client base is always going to be an aim for your company. It’s crucial to diversify your client base, so that the departure of regular client doesn’t send your business into meltdown. Client dependency and diversification is another one of the many scenarios we can model for you. By modelling the loss of a regular client we can see exactly how it will affect your business and adjust your dependency accordingly.

Fatigue

Last, and certainly not least, is fatigue. The day to day running of a small business and dependency on key team members can be exhausting. In some cases, it can lead to rash decisions and really take a toll on the business and the people in it. It’s vital to ensure that working hours and time-off are kept in balance. Refusal to take breaks out of hours or with annual leave can result in mental and physical tire. This leaves workers unproductive and unmotivated, and more importantly, sick and resenting their job in the long run.

Encouraging breaks, investing in automation services and ensuring that you have enough manpower will reduce the strain on your employees. Exterior assistance is as an option you may consider in this case. As we’ve said, happier employees make everything better. We want to take the stress away from your finances. Speak to a team member to find out how we can help you, your team and your business.

Would like to discuss this article and how it applies to your business?

Call us on +44 (0) 333 939 8503 or complete the form, including a best time to call you if relevant, and we will contact you.