There is something Tony Robinson OBE has said to me over the years that has proven true for successfully starting and running your own business. He said ‘Focun widding cussmers ankajfleur iskin’ which translated means ‘Focus on winning customers and cash-flow is king’.
Even I, a celebrity fashionista, best-selling author and investigative journalist, can sometimes get distracted by such as tall, lean but muscled athletes at the Olympics or Brad Pitt. One can forget to focus on winning customers and that cash flow is king but one does so at one’s peril.
Customers and cash flow do come together every time I negotiate a new client contract. Fight hard, tooth and nail, to get cash into your business as quick as you can. Cash is the lifeblood of your business. You cannot grow a business without a positive cash-flow.
For example, I’ve realised negotiating what the client sees as a lower daily rate for my services in exchange for an annual contract is a fantastic deal. This gives me monthly payments directly credited to my account on the first of each month.
Similarly, if I’m working in a country where I need office premises for me and my team of hunks, then I’d rather pay a little more for easy in, easy out terms – I can get out with a month’s notice rather than get tied into a fixed term lease.
Naturally, negotiating credit terms with your suppliers is a must too and the longer you can delay the better. But do not fall into the trap many start-ups do of accepting a deal that looks fantastic with good payment terms but which actually ties up your cash. So, you don’t need a year’s supply of business stationery or a 3 year maintenance agreement on all your technology or an effing pension scheme when you start up.
I had a friend starting up that thought that contracting with a magazine for a year’s advertising paid quarterly was fantastic. What an idiot – he’d committed all the money he had for marketing into advertising that he hadn’t proved worked just because it looked a good deal. If in doubt, spend little and often and keep the cash moving.
When you’ve negotiated the best deal you can on payment terms with your customers and clients you’ve still got get cute and fight to get your bill paid on time. You may even like to offer a discount for early payment when you submit your invoice. Make this big, black and bold on the invoice.
Before you submit your first bill, find out the name of the person that will be processing your bill. Seven to ten days before your bill is due to be paid phone them to check everything is OK and you will be paid on time. You’ll probably find your bill has been ‘lost in the system’ so you’ll need to ring daily until it is found. If your client doesn’t pay on time then make it clear on your reminder statement that legal action is automatic after a certain number of days.
Don’t worry about losing the client. If they’re in the habit of trying to get away with the late payment then then they are likely to respond first to those suppliers that are serious about taking them to court. Anyway, there are some clients; frankly, you just can’t afford to have – if they delay your payments too long. Start-ups are very vulnerable to big companies and government agencies taking advantage of them with impossibly long payment terms.
I’ve recommended that all Governments should take the lead in their countries It’s pitiful that Banks and the Big Supermarkets pay their bills in over 60 days. They call that prompt payment – instant death to micro enterprises, more like.
Government should ensure that national, regional and local government, all their agencies, all their suppliers and all organisations they provide public funding to support, should pay their bills within 30 days. They haven’t done it yet so get ready to kick ass.
For more from Soculitherz come back every weekend or purchase the Kindle book ‘Freedom From Bosses Forever‘ by Tony Robinson OBE (with Soculitherz) from Amazon.