This is a common question to ask yourself at start up, in fact anytime – do you have the cash?
Personally, do you have the cash and the resources to support you if it takes longer to get leverage into the market or you have a dry patch of sales over a period of time?
And in business, do you have the working capital or the reserves to cover your costs and trade without cash pressure? Because we need to avoid that pressure whilst we focus on what we need to focus on.
And do you have an eye on your cash requirements as you scale? What you need to trade today, to pay your costs of sales, to meet your overheads, will be a different requirement to what it is that you need as you scale and grow.
I encourage you to know your cash cycle. How long does it take to receive an order? Prepare, sometimes buy in the materials and deliver the requirement before you can even invoice your customer. Then collect the cash on your agreed terms, which they may take longer to be paid. It’s often the case that you require further investment in the next request that you have before you get paid on the last one.
So, what’s your timeline and what’s the cash gap to fund now and also as you grow the business?
