Turning a business cash flow positive


While Bellah is never short of new ideas, the problem has always been managing her financials and cash flow. When she joined the Money Makeover challenge, her business was sitting with a significant overdraft and her personal finances were relying heavily on debt.

Bellah is a single mother of three and runs a construction company that focuses on waterproofing, maintenance and renovations.

She has always had an entrepreneurial spirit and has started many businesses, including a shop that sold toilet paper and nappies. During lockdown, she has found innovative ways to keep money flowing by making and selling biltong, and has bought garden maintenance equipment to expand her maintenance offering, which will be run by her 22-year-old son.

While Bellah is never short of new ideas, the problem has always been managing her financials and cash flow. Last year her construction business made a turnover of R1.3 million, but she had no idea whether or not she was making a profit. When she joined the Money Makeover challenge, her business was sitting with a significant overdraft and her personal finances were relying heavily on debt.

Bellah has been working with Absa financial adviser Stacey Coulson, as well as Elton Govender, a senior enterprise development specialist at Absa.

Although the Covid-19 coronavirus and subsequent lockdown have had a material impact on her business, Bellah has been able to implement many of their recommendations. This should place her in a stronger position now that she can return her teams to full-time work.

Bellah with her business car. Picture: Leon Sadiki

Understand your financials

“A priority for Bellah was to start paying herself a regular salary from her business so that her debit orders wouldn’t bounce and give her a bad credit record,” says Coulson.

“With any business, it is important to treat yourself as an employee and pay yourself a monthly salary.

“You need to focus on living on this salary and not draw down cash from the business to meet your personal needs.

READ: Lessons in planning a successful property portfolio

“If you treat yourself as an expense in the business, you will have a better idea of whether the business is profitable or not. You also need to keep a proper set of accounts for the business.

“Bellah has started to keep an income statement on each project to ensure that she can calculate her expenses and profit per deal,” says Govender.

Treat yourself as an employee and pay yourself a monthly salary
Financial adviser Stacey Coulson

An income statement is a record of your revenue less expenses. This means Bellah must have a clear idea of what her inputs are costing her, including her salary. Other expenses in running the business, such as the finance on her bakkie, petrol, maintenance and insurance costs, should also be included as business expenses and allocated pro rata for each project.

Having a clear cost of each project will enable her to provide better quotations in future. One of the major problem areas in construction is underquoting, because one does not have a handle on the true costs.

Find efficiencies

In any business you need to outsource certain roles, especially if they are not your strong point. Having an accountant, for example, is important if you are not a numbers person or are finding new business.

A good accountant will ensure that you are managing your cash flow and tax, and the benefits will outweigh the costs of the service.

There are times when bringing jobs in-house can create significant efficiencies.

READ: How to kill that credit card debt

Bellah had outsourced all her work to subcontractors, but Govender identified that employing her own team would improve margins. This comes with an initial cost as they need to be signed up with the labour department, Unemployment Insurance Fund and the SA Revenue Service. However, not having to split her profit with subcontractors will generate better profit.

Find new markets through social media

Bellah was primarily focused on word of mouth to find new work and needed to find a way to reach a wider market. She has opened a Facebook page for her business – it includes references and the jobs she has completed – and is linked to other Facebook business pages. She has started to receive enquiries and hopes that they will turn into solid leads as the lockdown eases.

Bellah is working on building her company website and is fortunate that her brother is tech-savvy and is assisting her. He is also investigating improved search engine optimisation so that her website will appear first when people in her area search for construction services.

READ: Create extra income with a side gig

Don’t get fooled into paying a fortune for a website to be developed. There are many low-cost and even free web design platforms, such as WordPress, which allow you to build your own website. There are also many online tutorials to help you navigate the process.

Insurance is non-negotiable

When a business is facing financial difficulty, there is always the temptation to cut down on insurance, however, Coulson says this significantly increases the risk to the business.

Bellah has a bakkie which she needs for her business and if it was in an accident or stolen not only would she not be able to operate, she would owe money on a car she no longer has.

READ: Insurance policies you might not be aware of but need

“This is usually the first thing people tend to cancel when money is tight, yet it’s something that is protecting their assets. One can shop around for better premiums or increase the excess to reduce the premium, but not having cover is not an option,” says Coulson.

Tips | How to develop your business
  • Separate business and personal expenses.
  • Have a separate bank account for your business.
  • Account for all your income and expenses down to the last cent.
  • Look for savings in your expenses. Every cent counts.
  • Set long-term goals for your business and then break them down to smaller goals with timelines on when to achieve them.
  • When things go wrong, which will happen, have an impartial support base to bounce ideas off on how to overcome setbacks. Stress will hurt you and everyone around you.
  • Spend time thinking about the future and new product lines for the business so that it grows.
  • Don’t fear starting other businesses based on needs identified. This will diversify your income streams.
  • Use social media to advertise your business, and remember that clients will also use the platform to reflect poor service and/or products from your business.


Maya Fisher-French 

Personal Finance Editor

+27 11 713 9001
69 Kingsway Rd, Auckland Park

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