Turn Kshs 5 Bob from that one customer to most needed growth capital
Customer is the king. Cash is equally the king in any business. If you achieve ultimate goal for starting any business which is generating cash from the customers you have, your next chapter is almost certain. Best businesses are not the ones based on best ideas, but those based on ability to sell and bring money in the business.
The famous table banking is getting more fame day in day out. Ideally women started the micro channels that enabled them to access fast cash with more predictability. But this was famously known as merry go round where women would ensure every day they contribute like Kshs 20 bob, give it to one trusted person and after a certain period of time like weekly, fortnight, monthly and so on, they meet and give the total cash to one of them on basis of priority in the list of members.
Ideally this is a very strong story because majority of people who have a woman guardian must have seen at least one woman near them practicing this famous table banking or merry go round.
What would be the characteristic of a woman who is getting Kshs 20 bob per day to contribute. She must be in business or able to have access to some sort of revenue on daily basis.
Considering a woman who is in business the Kshs 20 bob per day equals Kshs 600 per month. That’s the multiplier power of money.
THE TRAGEDY
Many micro businesses operators and majority of Small Medium Enterprise owners have had a habit that is near to addiction. The habit of withdrawing that one shilling from the business for personal cause without any hesitation.
You will notice a successful woman in merry go round has managed to buy items like house utensils, good clothing etc. All these means business cash was used for personal issues.
You will notice for the established businesses, owners rush to buy high end vehicles, building private houses and buying other things they think are investments.
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POWER OF ONE SHILLING
The other day I was surprised by one of presidential candidate who revealed that if you take one shilling today and every day you multiply by two , then by the 30th day you will have 1.073 Billion. Doesn’t look true but it is indeed true. Try it.
Many businesses have closed down regardless of having very good ideas. However, many small businesses continue to operate for years because they are able to make at least some cash every day they open.
A grocer selling some carrots will always find a customer ready to buy a carrot to cook supper. Because their operation costs are very low they find themselves flowing with revenue to buy stock for the following day.
WHAT NEXT WITH THAT ONE SHILLING FROM THE BUSINESS CUSTOMER
We want to look at how the Kshs 5 Bob from that one customer is the most needed growth capital for your business.
#1: Power of cash flow in building customer credibility
Cash flow is the ability of the business to be able to make payment as and when need arises to buy an item relating to business operation. When you withdraw cash from the business for personal use you deny business ability to buy required stock when needed.
Many businesses find themselves taking loan to enable buy stock regardless of fact that there was cash but was withdrawn for personal use.
Availability of cash in business means it can be able to have enough stock all through and no one time it sells zero to customers who needed product. This builds credibility of customers. Secondly availability of cash means business can be able to buy stock at discount because they are buying in cash. This means ability to sell in more profit.
#2: Power of cash flow in business profitability
When business is able to have cash flow, the next thing opens up is ability to invest in right structures which include more marketing, getting the best employee and others.
These opens up the business for expansion through increased sales.
On same, business start operating with less loans meaning less operation cost. Over borrowing mainly for micro business stagnate business due to issues like inconveniences from lenders in case you are not able to pay on time.
Small businesses find themselves getting very costly money from sources like shy rocks who operate with high level of intimidation to business makers.
#3: Cashflow for business growth
When the business makes sales today and exhaust stock, it opens an opportunity to push for more tomorrow. This means requirement to buy more stocks. If on the next round customers are happy they demand more again for the following day.
This trend seems very obvious but it is very deep in regards to how it unlock business potential to grow. Many businesses find it normal to tell a customer that certain product is not available. This become a pattern because after all it is the simplest thing to do.
Two business can be compared. One that has at least one customer per day they tell a product is not available . Another business that ensure not even one customer walks away without getting a product they sell.
After a period of time, the two businesses will never compare in relation to growth level.
THERE IS SOLUTION
Yes, there is solution. The solution is building the right discipline towards business cash management. The last letter indicated some more discipline to build for your business.
We have clearly identified the benefit of business cash flow for growth of your business. These are undeniable.
The various required discipline includes;
1. Collect all cash through a dedicated business bank account. This one we mean all business cash
2. Issue receipt for all payment you receive from your customers to ensure traceability and trails when confirming all money
3. Dedicate all payment from business account to have some pre-checking that it relates to business activity.
4. Make a choice that you will safeguard business money
5. Ensure every person working for business is allocated some salary so that you can confirm if business is able accommodate or not. This should be same for business owner. The only huge chunk of business money to go to personal use should be defined dividend at end of some period like six months and so on.
In conclusion master the art of safeguarding business money. Watch your business grow for better. Cash flow is the king. Every business is scalable. Learn and discover how to grow your micro business.