How to get an extra £40k into your business

By Rupert Turton

We would probably all like an extra £40k in our business but it rather depends on why you want that extra £40k. This article delves into the questions you need to answer to help you get extra money into your business.

Do you need the extra cash to survive? Or do you need the money to invest in developing the business, such as to increase sales and marketing, training for staff, or purchase new equipment?

Have you won a piece of work or a project for which you need to fund the purchase of materials up-front before you get paid on completion?  Builders, manufacturing, and software developers will all be familiar with this scenario in some form or another.

Your cost base is the quick win

Once you know the definitive answer to the questions above, the easiest place to start is to reduce your cost base as this is completely under your control. This is simply looking at whether you need to spend the money on something or not!  Start by reviewing all your costs and decide whether they are all required.  How much value do they provide the business in terms of time-saving, automation, and ensuring customer service is great? Think about whether you can stop buying some things, or investigate whether or not you can get a better price (with the same great service) from an alternative supplier. Consider reducing costs by buying multiple services from a single supplier, or signing a longer-term agreement in return for reduced pricing.

Avoid lending money to your suppliers and customers

Largely under your control is the Cash Gap. The Cash Gap is the time between you paying for the goods and you selling them in whatever form! So many companies pay when they receive the invoice from a supplier (then I don’t have to worry about it!) or only invoice their customer when they deliver the full project and then have to borrow money to fund the gap, effectively lending the money to their suppliers and customers.

Money has a cost, and that money could be used to develop and build the business! If you manage your money more effectively you can pay your bills, reduce your borrowings and free up cash to invest very quickly.

Grow your business

If you can’t find (or save) £40k internally your next option is to generate more business. This has a number of moving parts so let’s work through them methodically. Look at which part of your sales funnel (lead generation, marketing, and sales conversion to customers) are not working or needs to be boosted, and then identify how you fix the poorly performing areas.

Look inside the business to make sure you are delivering an exceptional customer experience, happy customers are more likely to come back and recommend you to their friends. Then look at how you can increase repeat customers and encourage them to refer your business to others through promotions such as a 10% discount off your next purchase, a customer loyalty scheme, or a gift for introducing a friend.

Once you have custom, look into ways you could get your clients to spend more money with you.  A good example is the famous McDonalds question “would you like fries with that?” when a customer goes in for a burger and leaves with a burger, fries, and a milkshake and has spent more than double of what they intended to,  yet they are happy with their purchase and will likely return.

What up-sell or cross-sell opportunities are there in your business?

Maybe someone will give you the money?

If you can’t get “free money” from your business your next option is to borrow it. There are a number of business grants available at the moment so do your homework and find the one that is appropriate for you.

Remember if you decide to borrow the money you will have to pay it back at some point with interest. Put simply, if you are borrowing money to invest in the business the return needs to more than cover the costs of the loan.

Similar to borrowing the money is finding an investor, as we have all become familiar with watching “Dragons Den”! Finding an investor transfers part of your risk but you will probably have to give away part of your company in return. It sounds like an easy option but your attractiveness to the market depends on what your business does.

If your business is not in control none of these options are readily available to you

The bottom line is that behind all of these options you have to know how well your business is performing. A well-run business may well allow you to find the £40k from your current revenue or make it easier to apply for a grant or loan.

As a minimum as a Business Owner you should always know:

1. What your forecast and cash flow position is

2. What your marketing and sales need to deliver

3. Whether or not your business supports the current and projected demand

You then need to ensure you have a robust process in place to measure your plans against reality and know what you need to do if or when you fall off plan!

Not every business is the same. What works for one, may not work for the other. The key is to have someone who will help you review every inch of your business in an objective way. Someone who is outside of your business (and has worked with many different types of business) will provide a different perspective and provide ideas and solutions you may not have otherwise considered.  If you would like my help, let’s have a chat.  You can schedule a 30 min discovery call with me here