I used to manage cashflow on excel and online banking. Sometimes things got so overwhelming that I didn’t even look at it at all and was just blindly following the “I just need to make more money” path which is the best way to learn a lot of hard lessons. Nowadays, it’s easy to be an ‘Entrepreneur’ - you have a great idea and websites are easily set up. You have both? VOILA! You’re an Entrepreneur.
Being a visionary with a website and running a business are two very different things, and the transition can be slow.. but enlightening. My experience was exactly this: it was when I realised how to make use of technology and take full control over financials and data analysis that I managed to turn creativity into positive turnover. I manage 3 companies and with Mavericks Digital we mentor other start up businesses in all aspects. We’re all in our business infancy really but there are some lessons that have really helped us stick things out and take the next step.
A business is like a horse: YOU need to ride IT and be in control, otherwise you're just a passenger bobbing about on a saddle who can fall off at any second. It can take years before you feel you can get a grip on things, but here are some tools that can certainly help!
1) Google Sheets - hosted online and secured with your team. This is a great first step to track your sales, orders and most importantly, keep statistics of your sales. If you haven’t done this already, a P&L projection based on your existing business is a MUST. We now do this once or twice a year, based on existing sales. It’s a great way to cull dead ends and expenses while focusing and putting more marketing budgets for things that are an easy sell.
2) Selling goods? Try FBA - Fulfilment by Amazon is a great way to sell your goods without the headache. Yes Amazon and FBS can take up 25% of your sale, but having it tried both ways: you don’t have to hire someone to run customer service, you don’t have to run back and forth to the post office, you don’t have to keep money aside for postage, packing, refunds or replacements. You can instead focus on growing your brand and waiting for the money to roll into your bank. FBA can very tricky to set up to start off with so either have nerves of steel or hire an assistant with FBA / logistics experience..
3) PayPal - some people have a gripe against PayPal because it takes 2.5-3.2% of your sales. What you don’t always see is the extra amount of cash that you generate BECAUSE of Paypal: it’s trusted, it’s and easy buy-in for customers, you can pay by credit card if you don’t have an account, it always works. All these things help to make more sales. Extra bonus? They have a GREAT set of analytics tools, their phone app is just a dream AND, drumroll: Paypal Working Capital. If you need a cash injection into your business to buy more stock, within 5 minutes you could have an extra 5000k in your bank account. No credit check, no paperwork: it’s based on your sales patterns and you reimburse as your sales come in, by choosing to reimburse 10, 20, 30% etc of your sales. HEADS UP: I hate borrowing money so the first time I did this I wanted to reimburse the capital asap so I went for a 30% repayment of all my sales and I may as well have chopped my own leg off as I was eating all my profit margin. I repeated the experience with a larger amount and 10% repayments from my sales and I now barely even notice it.
4) Xero or FreeAgent - Out of all of the accounting softwares I tried (must have been about 20-25) FreeAgent was the one that was the most user-friendly for a first timer. It’s clean, it works, it’s professional, invoices are easy to set up (slightly more challenging to edit) and the BEST tool to manage cashflow is the BILLS function. This has been an absolute lifesaver and I’m still on the learning curve. But setting up some RULES has been the best thing that’s ever happened to my cashflow. I have all my invoices sent to ONE email address. This is picked up by my VA team (highly recommend to contact https://www.upwork.com/fl/cherryannm ) who input all of the bills on a daily basis. The most important part is setting the RIGHT DUE date. We have a 30 day payment term and for every bill that’s added we add that 30 days as a payment deadline. We now ALWAYS know what’s outstanding and I’ve switched doing payroll / accounts from once a month (hefty and bad for cashflow) to once a week (takes 2 hours max, breezy and good for cashflow). All in all if there is ONE thing that every new business startup should do is set themselves up on FreeAgent or a similar software. It’s a lot less scary (and much more liberating!) than you think!
5) Banking Apps - Having a good banking app is a MUST now for a business owner. I now do 90% of my banking on my phone rather than on the desktop app. It cuts down paying bills to about half the time. Natwest has the best baking app from what I’ve experienced, closely followed by Barclays. The difference between the two is that Barclay’s security is much more clunky and you can’t pay small bills without jumping through a number of hoops. Natwest is an absolute breeze to use, I check it daily and any bill is just very easy to pay. Better still, you can pay up to £250 of bills without needing to add each payee individually on the desktop app and putting in 3 different security codes. Winner on convenience.
6) Saving Account - It’s easy to spend what you have, just like it’s easy to fill up storage space (WHY would you leave a shelf empty!?). The trick for me was learning to put everything into my savings account FIRST, and leave enough for standing orders and paying Friday bills. 90% of our cash lives in the savings and we keep just 10% + move capital on the day bills need to be paid. By doing this we’ve saved approximately 15% of unnecessary purchases.
7) Get yourself a Virtual Assistant that can handle your admin, bookkeeping, sales stats, and anything else to help you keep an eye on your numbers. A good VA team can juggle a number of tasks for a small cost and without the need to employ full-time help. Cherry Godmother's team handle top-to-bottom admin tasks such as adding invoices to our accounting system, taking stock checks, processing orders, and VERY importantly - keeping statistics of our sales so that we can spend more time developing and growing the business.
8) Read “The Richest Man in Babylon” - it will be the best investment of your time and a few pennies you'll make in 2017!
I'm the co-founder of Mavericks Digital and run 3 businesses on the go. After having Cherry and her VA team run our admin systems for a year, I gave her the nickname of "Cherry Godmother"as a tribute to their outstanding work. As Cherry's VA team grew, Mavericks became a partner to facilitate the growth of the CGVA offices in 2017.