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.