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At a local networking event a couple of years ago, I met the owners of two very similar companies: they were both early-stage businesses, operating in the same sector, and at that time, there didn’t seem to be a lot to choose between them. Since then, I’ve bumped into the two owners fairly regularly. While Company A is still pretty much where it was when I first met them, Company B has grown and expanded, going from good to better, continually leaping from success to success.

This is typical: small businesses make substantial profits, grow to have hundreds of employees, and then sell for multi-million-pound figures. The rest never grow beyond fifty people and scrape together enough to keep going. 

For those in the latter camp, cashflow is always tight, and there’s only ever just enough money to make payroll at the end of the month. Perhaps you recognise this as the situation you are in yourself.

When it comes down to it, not making enough money is the cause of almost every major problem businesses face. This is because when there isn’t enough money, the business leader is faced with making compromises. The three most common compromises are:

1  Financial compromises

When a business doesn’t make enough profit, the owner will often feel obliged to meet other financial commitments first and settle for earning less than they deserve or less than they are truly worth. But making this compromise jeopardises their financial security and that of their family, not just in the present but in the future.

2  Personal compromises

When money is tight, business leaders often attempt to rectify things by working longer hours and doing more of the work themselves rather than paying others. They may justify this by saying it’s “just to tide us over”, but all too often, the temporary solution stretches longer and longer. These compromises harm the owner’s work/life balance and eat into the time they’re able to spend with their family; they may even damage their health.

3  Service compromises

Limited cash and poor cashflow management can force a business to lower quality, cut corners, or compromise on service and product ranges to keep within budget. Here the compromise harms customers’ interests and can potentially damage the company’s reputation, leading to lower sales in the future and pushing the business into a downward spiral.

These compromises seldom come alone, and together they compound the problem. The business continues to struggle monthly, never rising above mediocrity, never achieving its potential. 

Good cashflow management is key to business success, which is where we come in: we can help you get on top of things and take control. Why not give me a ring?