Running at a loss: what to do next
Most people starting up a business need to allow for a period when they have more money going out than coming in. If you have a loan, it’s a good idea to keep an eye on your business plan to see whether you’ve allowed for a period of running at a loss and have a realistic amount of capital to keep you going through that period.If your plans weren’t realistic enough or you’ve been hit by an unexpected downturn, you may have to consider raising further finance. Your bank manager will be looking at your cashflow forecast for three to six months ahead, to run reality checks on the kind of costs you face. Plot this out before the loan interview.
Check check check!
| Check your financial records and make sure they are accurate and set up so that it is easy to keep track of income and expenses |
|
| Are your bank accounts set up so that your business bank account is only used solely for the business and there’s no bleed through to personal expenses? |
|
| Do you have a separate account to put aside taxes and levies? |
|
| Check your invoicing. Are you on top of your debtors, invoicing work on completion and chasing up late payers? |
|
| What does your budget look like? Have you set one and are you on track with it? |
|
| Take a look at your expenses. Are there any you can trim? Is it possible to approach your creditors and set up time payment arrangements? |
Professional advice – who can help?
Lastly, are you trying to do all of this yourself? We understand that when money is tight, calling on a professional advisor might seem like a luxury you can’t afford right now. However, sometimes you can’t afford not to.What do you do when you’ve been through all your incomings and outgoings for the quarter and you’re running at a loss? It can give you the flutters but it’s not uncommon for business owners to find themselves in this position, particularly in the start-up phase. It can also accompany a growth spurt in the business before the business has really stabilised at its growth targets.