Have you ever asked an entrepreneur how much they make? And they respond with a ‘million from last month’ but no smile coming with it? Or any triumphant fist in the air? Yep. It is because it is deeper than that. Revenue is the easiest part of operations; if you have built a good brand and something people want/need; you will have sales easily. The trick is ‘where are those sales going’?
Many will tell you that you are managing your finances wrong. Look, they are probably right. But it really is more complicated than that. If you ever find yourself managing your company finances almost like driving to the grocer and buying a loaf of bread, then know that you have made it. If your company finances are as easy as getting into the car, starting it while sure there is petrol, driving with ease, parking, walking in without a storm in the way, grabbing a loaf on a shelf with many loaves, getting to tills with no lines, paying with cash that is entirely yours and leaving in one piece…you have made it.
In a company…it is not like that. Especially if you are like me and have no generational wealth passed down, and was born in another province, etc. So, you need to find a place to live (and pay for it); find a place to work in (and pay for it), then manage the revenue in such a way that the R10 almost covers R20 worth of expenses. You are thinking our mothers have been doing this for centuries…but bread was R0.35c then. R1 went a long way.
You will sit down at the end of the month stressing about where the money for the employee’s salary or rental will come from; while waiting for your clients to pay you. Then realise you made so much revenue in the month but OMG but where is it? The bank statement says R50 000 came in but you never ever once hold it all in one hand the entire month. This will be the case especially if you don’t follow he traditional 30-day month to month strategy. If you are me, and most creatives, you have worked out creative ways of managing the income and expenses in the month.
So, your money is always rotating. From the client, to you, to the fabric store, to other systems…then again next month. This is such an adrenalin rush…you realise you need to keep going to keep making it; and ideally if you stop, you owe some clients products. You are constantly loaning from this client to finish that client’s order. I am not the only one here right…I hope not. Operational capital is one of the top reasons many business owners have little sleep; and what keeps them coming up with new ways of directing the cash in the system to their pockets. It is also a very good discipline tool;
you suddenly know you better save that money because the end of the month is coming. They say how you manage your personal finances will filter into the business, unless maybe if you have a finance manager handling it with you. If you don’t have a business, in your personal finances you are always hoping one debit order gets cancelled this month so you can finally buy that new microwave you need. It is the dream to escape this, some have done it…so it is not impossible.
If your business is still growing and you have not had any free capital injection, then you might be in this boat as well. On top of the month to month expenses, you must add growth costs. In fashion it is essential to update a website almost every season. And, each season needs a whole new range, with models, a camera, location, PR strategy…etc. etc. etc. But I keep my mind on the main goal.
One day all these little efforts and pains will result in something bigger, better and more balanced. We will have million-dollar problems. So, never give!!
Article By Brigette Mashile