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Guide to staying afloat

Aug 15 2005

1. The first stage for any new business is to get to break-even point; after that, building up profits is needed for long-term survival.

2. Watch out for overheads; they have a nasty knack of rising with sales, thus continually pushing up break-even point.

3. Convert your business plan and forecasts into a budget which gives you, and your employees, something to aim for.

4. Keep control of your business by comparing actual to budget performance; try to draw the appropriate lessons to be learned and plot ahead any changes in your plan which are needed.

5. If you have employees, introduce a system of weekly and monthly reporting and setting of objectives.

6. Controlling cash can keep your business afloat until break-even is reached.

7. Make your cash work for you, that is, if you have spare funds put them in an interest-earning account.

8. Operate your bank account as efficiently as possible.

9. Try to speed up the rate at which your sales are turned into cash. Do this by exercising credit control and investigating potential customers, offering the tightest credit terms you can, sending out invoices promptly and chasing overdue bills. Use the Guide to chasing money you are owed.

10. Most successful small businesses have to stoop to delaying payment to their suppliers at some time during their development.

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