When company directors do these three simple things they’re more likely to balance the books and keep business booming for the long term.
As well as running the day-to-day activities of a business, a company director has to keep an eye on the finances.
So, here are 3 things that successful directors do to help long-term success:
1 - They 'get' how to measure financial success
There’s a lot of talk about adopting a growth mindset for business success, but less talk about growth metrics.
This is probably because some metrics are more exciting than others. Sales figures and revenues are more fun to talk about.
But great business directors understand the benefits of keeping a clear head, especially with financial matters.
This is why many directors adopt this mantra:
“Sales is vanity, profit is sanity but cash is king.”
Why?
Because cashflow is a better metric of financial health.
Cashflow is not called “the lifeblood of a business” for nothing: one of the top five reasons why startups fail, according to Fortune magazine, is because companies run out of money.
Businesses don’t go bust because they make losses, they go bust because they run out of cash. So, keep an eye on cashflow.
2 - They always make time for planning
Great directors actively make time for regular business planning.
Regular reviews of your cashflow projections will help to give a better picture of future issues. It can help to spot cash pressures.
Then, you can think about juggling priorities to gain some headroom.
Reviewing cashflow helps directors to take decisive actions like asking for payments before taking new orders.
You will already know the old mantra, but it is always worth repeating:
“If you fail to plan, you plan to fail.”
3 - They work hard on building relationships
In nearly every industry business relationships are vital to success.
Most industries – particularly the sectors we work with – will rely on 3 main types of relationship: customers, suppliers and funders.
With customers, great directors take the ‘partnership’ approach and show they’re working together for mutual success.
They ensure that customers pay on time and appreciate the levels of service that they provide. Sometimes they even offer discounts for early payments to avoid late payments.
With suppliers, directors keep them informed on future needs and credit limits.
They’ll let their suppliers know how their own business is doing to give them the confidence to keep supplying to them.
And if a major supplier is looking to increase prices, they may even persuade them to extend terms.
Sometimes, if you don’t ask, you don’t get.
With funders, a great director will ensure their funder is never surprised by any trading and will inform them of the good, the bad and the ugly. It means you can tackle issues early and work together on a positive solution.
Need a cashflow boost?
If their bank can’t assist, a director will understand that are alternatives out in there in the market.
Invoice factoring or Invoice Discounting can provide a much-needed cash injection when invoices are still outstanding.
These accessible forms of working capital are perfect for SMEs. At Skipton Business Finance (SBF) our friendly teams across the UK can provide your business with a finance facility from as little as £25,000 to as large as £5m.
Backed by and sharing the ethos of the Skipton Group, SBF look at the individual merits of a business as part of its underwriting criteria. It looks at potential sales figures and the whole context, not only credit scores.
If you would like a no-obligation FREE quote email info@skiptonbf.co.uk or use the quick and simple form on the right and we’ll call you back.
Find out more
At Skipton Business Finance, we offer the following types of Invoice Finance