We all have to learn from our own experiences or those whose advice we trust, but there is nothing like experiencing it yourself. Very early on in my business life, I went to visit a prospective client, and was immediately impressed with the cars they drove, the office they had and the fact they seemed to be doing really well. I mentioned this to one of my trusted advisers and he told me not to be fooled by material possessions. He said it is very easy for people to make it look like they are doing better than they really are. He said they would not have owned the cars or the office and they would be on finance. He was right – less than two years after this meeting they had gone out of business due to over committing themselves .

We are all guilty of this to a degree, and it is very easy once we have a bit of cash in our hands or win a new piece of business to spend it on something we really shouldn’t be spending it on.

I put my hands up as I am as guilty as the next person, but I think I have controlled it better than most or I would not have lasted 33 years in business and have been able to take a business from concept to sale as well as building a property portfolio which stretched to 23 properties at one stage.

Here are 5 tips all taken from personal experience – there are many more

1.     Never take out of the business more than you need to ensure you can keep a roof over your head and support you and your family. Your business has to be looked at as one of your family members and you should look after this in the same way as you look after your family. So don’t rob Peter to pay Paul.

2.     As regards the vehicle you drive, don’t overspend. If you are building a business, you do need to enjoy the fruits of your labour but to financially commit to funding a vehicle for 3 or 4 years when it is based purely on a piece of business you won yesterday is foolish. Commit to what you know you will be able to fund for a 3 to 4 year period. At the end of the day whatever vehicle you buy – if reliable – will get you from A to B.

3.     Constantly keep an eye on your business costs. Check them on a quarterly basis to make sure you are not spending more money than you need to. All business expenditure needs to be kept in check. Sometimes it is easier to reduce costs than to add income. When you go networking there are people who can supply every service you are ever likely to need. We cannot possibly take them all on board, or we will just be running a business to fund our suppliers. So be selective and check their credentials before using them.

4.     Know what your financial liabilities are going to be well in advance of when they are due. Don’t spend money that is not rightfully yours but is due to cover Tax, VAT or office rent for example. You cannot and must not use the excuse that you don’t have the money to pay what is due. Ignorance is not an excuse.

5.     Make sure you prepare for the what ifs. We may not know what the what ifs are likely to be, but we do know recessions will come from time to time for example. So make sure you are constantly being creative. Business does not stand still and if we are doing the same thing this year as we were doing last year, we are probably going backwards. We need to make sure we have a “slush fund” to cover situations like this as well as making sure we are constantly reinventing ourselves and not just living on past successes. We must always be looking to the future.

Running a business is fun. Hopefully there will be more ups than downs, but please don’t try and do everything yourself. Don’t be frightened to ask for help. It is a strength and not a weakness to ask for help and advice.

I surround myself with quality and trusted business owners so if you do need any help and support and cannot find what you are looking for, please let me know. I am happy to help you.



This article was first published on LinkedIn by Richard Knight on 02/03/2020