This month’s article on cash flow management shines a light on one of the most important things business owners and entrepreneurs can do to help your business win new clients and continue to grow: maintaining a competitive advantage.
This is the seventh part in our ongoing series on cash flow management, you can read the previous articles here:
- Part One: Cash Flow Basics
- Part Two: Failure to Plan is Planning to Fail
- Part Three: Those Who Shout Loudest Get Paid First
- Part Four: Must Have or Lust Have
- Part Five: Working Capital – Make it Work for You
- Part Six: Shelter Your Assets
Part Seven: You’ve Got to Innovate to Accumulate
Many business owners are resistant to change and innovation, whether it’s due to a fear of failing or an attitude of “that’s the way it’s always been done”. But if a business is going to succeed in the long-term, the most important thing it can do is to stay relevant and maintain a competitive advantage.
There are many ways to achieve this, from adopting a niche and focusing strongly on your target demographic, to finding new and creative ways to service your customers’ needs. However, it doesn’t matter how good you are at what you currently do, if you never develop and grow then before long your existing customers will move onto the next, leaving your aged products and irrelevant services to gather dust.
It’s not enough to simply follow the crowd either, you need to be different. If you can’t be an Innovator or Early Adopter, then you’re going to miss out on a large section of the market, and if you are one of the first to adopt a new technology then you could end up on the hamster wheel of innovation, constantly trying to keep up, which could be expensive.
Instead, differentiate yourself from your competitors and the right customers will find you.
Invest in Tech to Cut Overheads
“The pace of change has never been this fast, yet it will never be this slow again.” These words were spoken by Canadian Prime Minister Justin Trudeau in 2018, and since then events have only reinforced this message.
Technological advancements are coming thick and fast, impacting on almost every industry as the world of business becomes increasingly digital, green and accessible. Even HMRC has been forced to adapt, launching its digital tax initiative, Making Tax Digital, to encourage business to submit their tax information online.
Technology is an investment that should be carefully considered before taking the plunge. Not only will you be forking out for the hardware and/or software, but you’ll also be spending money on training your staff to use it, and you could lose money from potential new sales that your team miss out on while they get up to speed with it.
With that said, new tech is often well worth the cost, as it can improve efficiency, productivity, and quality once it’s bedded in. Just be sure that the innovation is a worthwhile investment and not an expensive gimmick, let the Innovators test it out and iron out the kinks before joining the Early Adopters or Early Majority who jump on the bandwagon.
Innovation doesn’t have to mean IT, it can simply refer to new ways of doing something that increase efficiency. Review your processes and look for areas that could be streamlined, remove unnecessary steps and cut non-essential costs.
Ask for feedback from your staff, if they are happy with the current way of doing things then introducing a new piece of software or technology may not be the best option. In times of financial difficult, you can’t always afford to be the most up-to-date and technologically advanced company in your industry. When the time comes to make sacrifices in order to survive, the first thing to go should be the non-essential, nice-to-have tech if there’s a perfectly adequate, cheaper option.
The next post in our cash flow management series, Treat Your Suppliers Like a Bank, will look at ways you can take advantage of credit terms to manage your own cash flow, without negatively impacting your suppliers.
Don’t want to wait? Click here to get our guide, Happiness is a Positive Cash Flow and read all our tips and advice for achieving and maintaining a positive cash flow.
Get in touch to discuss your individual circumstances and get some independent, impartial advice on your business’s financial health.