Do the words cash flow management bring you out in hives? Do you struggle to understand how cash flow and pricing are linked? Do you understand how critical cash flow is to your business? Cash flow is an essential aspect of your business, and you need to understand it. But if it currently makes your head spin, you’re not alone! 

So if you’re looking to better understand and manage it, keep reading, as this blog post is just what you need.

What is cash flow?

Cash flow management is basically what's coming in your business and what's going out of it. It also covers what's gone out of your business and what’s coming up and due to go out of your business. Because it’s essential to know what payments you have coming up so that you know if you've got enough cash to last you.

There's a saying: ‘Revenue is vanity, profit is sanity, but cash is king’. It’s a good one to remember because, ultimately, if you don’t have cash in your business,...

Have you ever wondered how to get investment in your business? For many business owners, it’s something they may never think about or want. But depending on your goals, it’s worth thinking about investment or borrowing, as they can help you quickly grow your business to the level you want.

I must confess, this isn’t an area I’m an expert in, so it was great to have a podcast chat recently with Chartered Accountant and founder of Raised Up Finance, Deborah Edwards, on this subject. So if you’d like to learn more about getting funding for your business, keep reading!

Two things to consider before looking at business funding

There are many different ways a business can grow. But if you’re looking at growth in terms of funding and investment, it comes down to two key things - the speed you want to grow and your attitude to risk.

The speed you want to grow will help determine the choices you make for your business. But your attitude to risk will also...

How can you pay yourself more? It’s something many small business owners ask themselves and small and micro businesses, in particular, struggle with this. When it's just you, it can be difficult to make sure you're paying yourself because you tend not to think of yourself as a salaried person or an employee in the business.

But actually, you need to start thinking about yourself as somebody else you need to pay and not just an afterthought. It’s not just about paying yourself whatever's left in the bank at the end of the month. Because when you do that, there's a temptation to think that you’re doing really well in your business when you’re not! This is especially relevant if you’re a service business and delivering a lot of the work. You can often find that you’re actually not paying yourself anything and working for free or very little. The thought is its work that isn’t costing anything because it’s ‘just’ your time -...

What even is a CFO? A CFO is a Chief Financial Officer or Finance Director (FD).

Every big business has a finance director or CFO and they are needed to keep the financial affairs of the business in line and to provide valuable financial management information to the business. They are your trusted adviser and translator of the numbers!

In small businesses you don’t need a full-time FD/CFO but you do still want to know what your numbers look like on a monthly basis and have someone checking on a regular basis.  People often think that they can’t afford to have finance support in a business.  This is very different from a year end accountant where they are producing the statutory returns for your business.  They are not there to analyse your business and understand your business in detail but merely to submit the tax and legal requirements.

If you just have a year end accountant, this can mean that you only look at your accounts once a...

I think all service businesses (and some product ones too!) should have a power hour as part of their portfolio. It's a chance for people to work with you at relatively low cost, and you can get a result in an hour for the client.

It also deters time wasters who just want something for free.

What is a power hour?

A power hour is an hour of your time where you solve a specific problem for that client. So for me, it is pricing a specific thing, or increasing your profit in a certain area. I can't solve all of your pricing problems in an hour, so it's best to pick a topic and be really clear about what you can (and can't) cover in an hour.

Why do I need a power hour?

Do you often get people "tyre kicking" or saying "can I pick your brains about....."? It can be hard to say no, but you can end up spending a lot of time for free and giving away lots of your hard won experience by doing this. And people will push your boundaries all over the place if you let them!

Is it difficult to set...

So today I want to talk to you about five ways to avoid discounting when talking to a client. 

Picture the scenario, you send a proposal to a client and the client says they can't afford that. And the And you immediately offer to discount with no reason to do so.  Instead, take a deep breath and do one of the following 5 things:

1. Ask the client what the most critical thing that they need doing is.  If they are a new client, it might be that they haven't seen what you can do yet, they might be worried that they're spending money they won't get back. And so ask them what their most critical items are, and which ones you can start with. You could also start with what the budget is, and this would guide you as to what to start with and how they can get a result with a smaller budget.
2. Packaging your services.  I believe this gives people more options, plus makes it clearer.  It avoids awkward pricing conversations before they even start, so having conversations...

It’s safe to say that most businesses want to be financially successful. I’m sure there are many who want to be earning more than £85k per year, right? Well, not necessarily. There are an awful lot of businesses that want to avoid getting near that figure - simply because it’s the threshold for VAT registration!

Don’t want to pay VAT? That’s understandable, but having that artificial ceiling in place is stopping you growing your business further.

So it’s time to stop letting that artificial ceiling stop you. It’s time to realise that paying more tax is a good thing - and here’s how you can pave the way for that transition into VAT registration.

Start increasing your prices before you hit the VAT registration threshold

Look ahead and start increasing your prices. This is especially relevant if you are a B2C (consumer) business or are a business that sells to people who are not VAT registered. Most B2B (selling to businesses)...

Do you know your business numbers? It’s one of those areas of business that many shy away from, but it’s a crucial element you need to understand, if you want your business to grow and be profitable. 

So why is it so important and what numbers do you need to know? 

Make informed financial decisions

Knowing your business numbers helps you make informed decisions for your business. For starters, how will you know if your business is making money or losing it? If you know your numbers you can decide if you can afford to make investments or hire a mentor.

But knowing your numbers will also help you know if you’re on track with your business and general financial goals. You can see if you need to increase your prices to cover VAT or to better reflect the value you bring to your customers. 

And if you’re at the stage where you are considering getting someone to invest in your business, you’ll have the numbers to back up why they should consider...

Cash flow is one of the most important things to monitor in your business. Without cash, you don’t have a business - and a lack of cash is one of the biggest reasons why businesses fail.

If you want your business to be successful, it pays to know what is happening financially within it!

Cash flow - the flow of money in your business

Simply put, that is what cash flow is. It’s the money in and money out of your business. That flow of money is the lifeblood of your business. You want a healthy flow of money because, if you have too much money leaving your business or not enough coming in, your business is in trouble.

And if you don’t know what’s happening with your cash flow, you can’t hope to know if your business is profitable or not either.

Why cash flow is important

Knowing and tracking your cash flow is more important in uncertain times. You need to know how long your money would last if you were ill or something happened and you lost key clients...