Be Careful What You Wish For

ARE you taking advantage of business opportunities? Or are you overtrading? In times of hardship it is important to differentiate between the two. At certain times it can be sensible to stretch resources, in order to service a new customer or section of the market. Provided this period of excessive trading is controlled and can be coped with, it is easier to put up a case for obtaining additional capital.

However, what begins to look like positive growth can end in disaster, so cash-flow forecasts are vital for planning ahead. Make provisions for additional funding if needed, well in advance.

Remember, cash is king, and those businesses that fail because of a lack of cash-flow are potentially profitable. That’s the tragedy. Taking on that big order could mean buying more materials, possibly employing extra staff and an outlay of cash that can put your business under severe pressure. That’s why the importance of cash-flow is critical and must be addressed. An order is not an order until it is paid for. And a customer is not a good customer unless your invoices are paid on time.

So, go after new business by all means. However, don’t put your future at risk.



4 Comments

  • Paul Charlton

    It's tempting to take on more work but it has to be tempered with a lot of things.Is the customer going to pay promptly? Have they got a good reputation for paying? Have you done your homework properly? If there is a delay in payment, can you cover it in terms of cash flow. It's a risky thing, particularly to take on one big client. I believe you are better off taking on a few more clients to spread the risk. But sometimes, that opportunity doesn't come around and you have to decide on whether to put most of your eggs in that one new basket. the elements need to be fully understood and worked out before you take that plunge on a new customer.

  • Mary Hull

    You need to work out what it is you can take on and achieve and what it is that will overstretch you if you do take work on that you cant cope with. I agree, in this recession, or at least recessionary times, it is difficult to turn away work.

  • Michael

    Easy to do when you're not in a trade such as building, then it becomes a different ball game.

  • Maurice

    Taking on more work is a natural thing to do when you need it.
    I agree though you have to be careful and consider the client, making sure they can pay you.
    Of course, they are probably relying on someone else playing them, and so on, which is why businesses really need each other.

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