What process do you go through when spending money?
How do you set out and justify any new and additional spend?
What is the effect on your margins?
Can you afford it?
However impressive your design team is, how big your market is, how few competitors exist in your field, how amazing your reviews are, etc etc
It doesn’t matter more than cash.
Cashflow is the lifeblood that runs through your business. Your business can run successfully without many things. But it just cannot operate in any shape or form with no cash.
As business owner you need to fiercely protect your cash. Make wise decisions on how you spend it.
Yes. Of course you need the raw materials to deliver your service / make your products.
I’m talking about the things you buy on a whim.
Do you ever take time to check affordability? Do you make sure you are making the purchase at a time that the business can afford? Timing can be crucial with cash. If you’ve got masses of payments going out around a particular date, or sales are low because it is holiday time, then it doesn’t make sense to make new purchases then.
Spending the cash may not effect your business dramatically today, but it may affect it in the near future. If sales suddenly drop off, or the cost of your raw materials rise, you’ll likely regret splashing that cash earlier.
Double check when making new cost commitments, do they fit with your business strategy? Did you build them in to your plan? Have you got other planned changes coming up that you will need that cash for? Or that will obliterate the need to spend now?
If you really do need to spend, what will you do to mitigate a hot on your margins? Can you increase sales? Improve productivity? Quality? Increase prices? Reduce costs elsewhere?
All businesses need to continually invest just to stay in business. So no, I’m not suggesting you stop investing and improving. I’m merely encouraging you to have respect for your cash and make decisions wisely. Know why you are spending and how your business is going to benefit from it.
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