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Cashflow Cashflow is the lifeblood of any business, and any business without a healthy cashflow will not survive for any length of time. To ensure that your cashflow is healthy, always ensure that: 1. Your customers pay you a deposit on every job. The deposit has to at least cover the costs of raw materials because if the customer doesn’t come for the job then at least you won’t have lost money. 2. You don’t give credit if you can avoid it. It’s not just your cashflow that will take a hit but you may well end up with added expenses to have a person to manage these accounts and call for payments when the customer inevitably “forgets” to pay you. 3. Make sure that your profit margins are high enough to cover your expenses. 4. If you have a product that’s not selling, discounting it should be the last thing you do. Try offering it in a bundle (people love bundles) first. 5. Don’t give discounts unless the value of the order justifies it. 6. Don’t buy items for your personal use out of company money. 7. Always pay out less money than the company receives. 8. Pay your expenses weekly so you don’t have a huge amount to pay out at month end. 9. Don’t buy equipment out of cashflow, rather finance it – take it on budget on your credit card if you can’t get finance. Yes it works out more expensive than paying it upfront but it’s no good having a shiny new machine and no money to buy raw materials for it. 10. Plan your trips so that you make the most of a trip out of the office and don’t waste money needlessly. 11. If you need to buy a specific product and the supplier further from you is cheaper than a supplier close by, calculate (using AA rates) how much it actually costs you to go to the cheaper supplier and if he saving exceeds this amount only then should you go to the further supplier. 12. Maintain your equipment according to your suppliers recommendations so that you’re not wasting money on avoidable repairs. 13. Don’t skimp on things like ink. Cheap ink which could damage the print head of your printer will cost you much more in repairs or replacement of your printer than you save on the ink.
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