Cash flow concerns

(File: Shutterstock)
(File: Shutterstock)
A Fin24 user had to give up his job to run his business full-time, but has now lost his salary buffer. He writes:

I have been running a business for a little over three years now. For the first two years I was working full-time while running the business part-time.

With growth came the necessity for me to be on board on a full-time basis.

This now suddenly meant my salary could not cushion me or the business in the event of a delayed payment from clients.

In the past I would sacrifice my salary to pay salaries while I waited for the clients to sort me out, then I paid myself.

Because of this new situation, when payments are late it also means that salaries may be late. This has created an unproductive working environment, resulting in high employee turnover and lower client satisfaction.

I have gone the financing route which worked at first, but with delays this also caused me to have a bad credit record for late payments.

This business is my passion. I live for it but in the last couple of months I feel I am too involved to see through the haze.

How can I ensure that I continue to grow the business with a low staff turnover, with proper cash flow management? What assistance can one get through mentoring?
Business development consultant Anton Ressel responds:

You have not mentioned what sector you are in, which can impact cash flow management significantly.

However, in general I would question your business model: why are you always having cash flow problems?

Financing a poorly-conceived business model is simply like pouring water into a leaky bucket.

While your passion is to be commended, it may be time to take an objective look at the business and ask some tough questions:

  1. Why am I always on the back foot?
  2. Would I work for someone else for free?
  3. If change is needed, where do I start?

In terms of mentorship, you can try the Small Enterprise Development Agency (Seda) or visit Fetola and see if they have any programmes you might qualify for.

 - Fin24

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