What's the biggest challenge in expanding your business? Is it resources or is it winning orders? Is it IT? In fact your most likely challenge, even if you don't realise it, is going to be funding. Yet that seems counter intuitive because more sales equals more income - so what's the problem? It's simple to explain - it's a timing difference, in short the money goes out before more money comes in. That's the bit that needs financing. where's it coming from and how much do you need?
If you've got a cash pile then maybe you've no problem, at least until it runs out, otherwise you'll need to do what most expanding businesses don't do and that is plan. A Cash Flow Forecast is the basic tool but for most businesses that's a challenge. Who is going to produce it and how? What's the basis - are there any sound up to date Management Accounts from your Sage, Xero or other system?
This applies most directly to businesses that sell on credit to customers however even those which are paid at point of sale still have to finance the extra stock, selling and admin resources in advance. There's nothing more sad in business than seeing a 'successful' rapidly expanding company go bust and the most likely time for this is when coming out of a recession, just like now.
On the positive side good cash planning will enable you to expand without this restriction and boost your profits.
A short Action Plan:
1) Make Cash Flow top of the agenda
2) Review, tighten and implement your Credit Control system
3) Check and chase your debtors
4) Plan your cash flow for at least a year
5) Ensure you have sound, up to date accounts as a basis for planning Take 5 minutes to think this through - it could save your bacon
MD BookCheck Ltd