Small Business Big Profit

What a topic to write about!  This happened to me in Spring 2007 and with the benefit of time and hindsight it is something I should have accepted months before it happened.

I was busy trying to do too many things to be able to focus on the few that were important and in the end lost that particular business.  Instead it would have been better to have dealt with the insolvent situation as soon as it happened.  But what would you have done in the same situation?  Keep on chasing the debtor and hoping that one day they will be nice and pay their debt? I am big enough and ugly enough to know that it happened and that’s all there is to it.

In terms of looking at other business activities and the way these are now managed and operated the difference s that everything is bought with cash and nothing is taken on credit.  We control the type of clients we have now so that we don’t end up being owed so much money by one client ever again.  When that business collapsed we were owed a nice six figure sum by one party and the amount represented several months turnover for us.  I should never have let their credit position be so generous from us.  Whose fault? My fault.

Watch for the ratios of who owes you.  Compare what is due to you to the value of this same amount against the time it represents in your business.  If a company owes you $10,000 what does that amount represent in terms of your overheads and wages for what period of time?  How vulnerable do you want to be to non-payment by your debtors?

Set some parameters and look not only at the total amount of debt you are willing for your business to carry, but also at the maximum you will allow to any one client.

And remember that you should be able to have a business that you run as opposed to one that ends up running you, and then hurting you.  It’s a tough pill to swallow and life will be hell for a while.  But life does get better and you’ll look back with the benefit of that experience and smile.  In the meantime if you are worried about where the business is and you want to talk about it then make sure you talk with people who are qualified to help.

Nick Sturgeon is a small business owner who has benefitted from the experiences of success, failure and financial recovery. The author of “Small Business BIG Profit” published by FT Prentice Hall, Nick writes and speaks from the heart about Risk, Reward and the Power of Personal Enterprise. nick@smallbusinessbigprofit.co.uk