Deposits, minimums and billing – a small business owner’s BFFs
You know how in real estate the saying is location, location, location? Well in small business, it’s all about cash flow, cash flow and cash flow.
In the past year, I’ve had to rethink alot of things about my business. The friends I’ve met along the way are deposits from new clients for new projects, minimum hours for new projects and weekly or bi-weekly regular billings.
I used to bill monthly, never asked for deposits and worked whatever hours I was offered. But it’s killer for cash flow. And bad cash flow kills – or threatens to. Small businesses (under $1,000,000 in revenue and 5 or fewer employees) usually self finance through personal credit as banks and credit unions are unlikely to lend – especially the elusive operating lines of credit – which are indispensable to big business. Has this inflated the personal debt numbers? Given the number of small businesses (over a million of us in BC, apparently), I’d venture to say yes.
Anyway, it’s a matter of discipline – and it’s not always that fun to have to do or that easy to get. But such is life in small business. So if you deal with one of us, and we ask for some money upfront, you’ll know why. When we’re bigger, we’ll be easier on you. You have my word.