It’s that time of year again when Christmas is bearing down on us, a New Year is around the corner and the beaches and summer holidays beckon.
But what does that mean for your business?
Whilst, on the one hand, we’re in wind down mode, looking forward to perhaps some time out from the business, we may well be staring down the barrel of a difficult cash flow period.
One of my mentors told me that when everyone else is thinking that no one does business in December, he’s busily proving them wrong. He told me that he signs up a lot of business in December ready for kick off in the New Year and by doing so he doesn’t have to worry about his cash flow.
The first step in the process is to have a solid budget and forecast for the coming months. Review your forecast if you already have one and check to see whether you need to tweak it or change if for the current circumstances. The benefit of the forecast is that you’ll know exactly how much extra work you need to bring in to cover any cash flow shortfalls.
To help ensure you don’t have a cash flow crisis in the coming months, consider the list of suggestions I’ve compiled for you.
- Special offers or promotions for January.
- Get a deposit up-front for work to be done in the New Year.
- Contact your existing clients and check whether they or their accounts department will be shutting down in January and if they are, ask them to pay your invoices before they close for the holidays.
- Talk to your existing clients and ask whether there is anything more you could do for them and sign them up with a deposit paid up-front.
- Offer to be the fill in person to cover for people who are on holidays in January so that the work gets done.
- Follow up all your existing proposals and ask for the decision.
- Consider whether there is another service you could offer that would help people who either want a break themselves or who are short of staff.
- Contact your suppliers and let them know in advance if you think you’ll have difficulty paying their invoices on time and let them know what your plans are.
- Not ideal, but if you have work signed up for the New Year but you know you’ll have a cash flow crisis before the work is paid for, consider taking out a short-term loan to tide you over. Beware of this and make sure you’re getting reasonable interest rates on the loan. There are some short-term funding options for business with exorbitant interest rates around that are absolute last resort options.
The one thing I’ve found is that when you have a goal, it’s amazing how often you will achieve it. By identifying the dollar value of the additional business you need to keep your cash flow under control and focusing on it, you’re much more likely to avert a crisis.
