Handling monthly cashflow problems

YoungBusinessman

Exactly, just news to decide exactly how much is enough when taking the plunge. Blockbuster latest to go into administration, big companies like that going busy this year yet I'm planning on starting out, am I wise?!

Needs to be done though, it's a lifestyle choice aswel as the money and success. I thrive to have the work I want to keep me going

paulwf

YoungBusinessman wrote: »

Blockbuster latest to go into administration, big companies like that going busy this year yet I'm planning on starting out, am I wise?!

HMV/Jessops/Blockbuster have all been the victim of major and very disruptive shifts in the way technology is used. Their days were numbered whether or not there was a recession.

Other casualties such as Peacocks, Blacks and Comet have had some dubious corporate level mismangement and asset stripping and their demise wasn't really related to the recession.

Game purchased Gamestation and had a massive duplication of stores in high rent locations, Clintons purchased Birthdays and again duplicated branches but also had far too many and too large prime locations. Basic mismanagement rather than recession and there was also some behind the scenes moves to force Clintons into administration with the selling on of loans.

A 5th year of recession is making things very tough for us small businesses but the big chains live in another realm where things work very differently.

getmore4less

YoungBusinessman wrote: »

Well cash buffer should be over £5,000 by time I take plunge, with my personal expenses being low despite having just taken on a mortgage, this will cover 3 months outgoings from the off, assuming nothing unexpected pops up.

This is no where near enough unless you have massive margins and good income stream allready.

How many clients?
Is enough cash in advance/on delivery and not on credit.

YoungBusinessman

How many months should be deemed enough? Client amounts can vary between a couple a week to 1 job lasting a few months. If i can find 4 or 5 "big" jobs a year, im sorted. I work very long hours every summer, the winter i work as much as i can but if its too cold then nothing i can do and i have to step back.

So far all own jobs have been cash upon completion. Maybe change this for bigger jobs and get half payment halfway through, half upon completion.

The big question is how much should i spend on advertising. Obviously i need as much work as i can get, can always outsource and still make profit. I need to get a continuous lead of work, with word of mouth being key. I do get clients through work of mouth currently but not near as much as i should be. I dont have name on my van/plant equipment, this will be getting done as soon as i leave my full time job, not before incase of treading on employers toes.

somethingcorporate

Well given that lack of cash will kill your business off quicker than anything else (you can always find more customers, if you cannot pay your bills you are pretty stuck) than as much as you can.

YoungBusinessman

Point taken, will definitely look to seeing out the year in full time employment to give me that wage to fall back on. By time I go solo I want to have had a good enough income from self employed own jobs that I havnt had to touch my full time income for 3 or 4 months. So if this happens by year end, il take the plunge as saving that 3 or 4 months full time salary will amount to at least £7,500, more if the weather is kind to us.

Just want to be sure of what I need in place before I go for it. Stepping up advertising now, will most likely end up being my highest outgoings!

doningtonphil

have you thought about invoice factoring?

we use it. we forward an invoice to the factoring company. They send us 80% of the invoice the next day (minus 2% + VAT charge).

***edit - sorry forgot to add that the remaining 20% is forwarded once the customer has paid the money to the factoring co!!!!!!!!*******

People have suggested 5% discount for early payment which makes the above look attractive.

You don't have to nominate all of your customers (but once you have nominated a customer you put all their invoices through). There is an initial charge of £250.00 with a minimum 1 year contract.

Adding 2% to your invoice cost to cover the charge is barely noticeable.