Business fjnancial advice

[FastFibre]

I started a uk utility infrastructure company with nothing in 2023.

I now have revenue of 40k per month but cashflow is literally killing me. I have poor personal credit and started the business with less than 2k on a deposit for a van lease & some equipment.

I have a good pipeline of work and massive opportunity for growth but i am seriously impeded by my financial situation, so much so im struggling to run the business on a week to week basis and in desperate need of a working capital injection.

 

[Ian J]

I'm not sure quite what a utility infrastructure company does but if your customers are commercial undertakings who pay you after the "job" has been completed could invoice factoring be of help to you.

Have a look at my website Factoring Solutions and if you think that we could be of help please feel free to give me a ring

 

[Mark T Jones]

Definitely talk to Ian

Also look at your terms with both suppliers and customers- can they be improved?

 

[Gecko001]

I was in a construction related job for over 40 years and have seen many companies going to the wall citing cash-flow as the problem, when in fact it was usually to do with lack of capital. It is a sector where suppliers are often very unforgiving . Yes people in it will boast about how they started the company with very little in the bank and hardly ever being in the black, but in reality they had capital either by owning their own premises, plant, or other tangible assets.

I would look at the projects you take on and make sure you are not chasing turn-over rather than profit. I know that is always said when a firm grows quickly, but it is no-less true for all that.

 

[pentel]

Doing monthly historic and forecast profit and loss and cash flow might help you see what is happening.

 

[Paul Kelly ICHYB]

Well done for building £40k revenue.

What is the profit on this?

Who are your customers?

Why are they delaying payments to you?

 

[Paul Norman]

I did a consultancy assignment for a company involved in what I assume is the sector you are in.

Like you, they had a strong revenue, and a full order book, and masses of opportunities.

Like you, they were always struggling for cash.

The reasons behind this were:

1. Lack of systems, including financial, which meant they were never quite sure where they were. It also had an impact on payment times, because they struggled to demonstrate deadlines were being met - even if they were.

2. Actually, the margins on the revenue were not massive, and most suppliers required paying fairly swiftly. And, of course, labour costs were a big part of their costs, and these had to be met promptly.

In their case, the problem would have needed a significant funding stream - either by loan, or by cash injection.


Of course, your challenge might be very different, but you probably do need a sit down either with your accountant, or someone that gets the numbers and the sector, to drive out solutions. Preferably, this would be your accountant.

 

[BusterBloodvessel]

I would echo some of the above and urge you to sit down either on your own or with the help of someone and go through every aspect of your finances, and - just as crucially - of your operations. Look at whether you're business is truly profitable, or if certain jobs/services aren't. If they are all profitable, where's money being held up or at the very least what would you do with a "cash injection".

Reminds me of a similar situation a couple of tradesman friends have been in, one in particular - a very good friend of mine and we almost quite seriously fell out over it. He would constantly moan that he was "going round in circles", that "it's in one hand and out the other", "at any one time I'm owed x amount" blah blah blah. But the problem was all he had in his head was this magical idea of "I just need a float. If I could just get 2 grand/3 grand/5 grand (the figure changed regularly) I'd be OK and could finance everything". I can guarantee if someone had just shoved 2 grand in his bank account he would have ended up back in the same boat in a month or two because he had no plan to manage things and didn't really know WHERE or WHY he needed this float.

I eventually managed to get him (kicking and screaming) to sit down and analyse his finances and operations. He was always busy, and appeared to be invoicing good money. But he wasn't organising jobs around when he would get paid vs when his accounts at the suppliers would be due. He wasn't factoring in time and costs of going getting supplies or getting to and from jobs (nor was he being efficient with that - he was working on a job-to-job basis and visiting the builders' merchants a ridiculous number of times per week). One of the interesting ones for him was that he realised he was actually being a busy idiot including paying a labourer that he couldn't justify and that was costing him money, as well as running a van that wasn't required. He scaled back his business, got rid of his labourer, got more organised and now works less hours and earns more money!!

Sorry, bit of a ramble but that would be my starting point - don't just get bogged down in the idea of "I just need some operating money"... look at WHY you need that, and what could be done to mitigate it?

 

[Frank the Insurance guy]

In their case, the problem would have needed a significant funding stream - either by loan, or by cash injection.

Hi Paul,

So how did this turn out in the end - following the review, did they make any changes or did they get the funding they needed (if so, did this sort out their problem)?

Real world examples are always great to hear.

 

[Paul Norman]

Hi Paul,

So how did this turn out in the end - following the review, did they make any changes or did they get the funding they needed (if so, did this sort out their problem)?

Real world examples are always great to hear.

This was some time ago - I have not done business consultancy for a while.

I believe the company got acquired fairly soon. They had a decent chunk of their market, and a rival acquired them for the turnover, and were able to absorb them into their own infrastructure and make it work.