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Five top CEOs share their thoughts on cashflow

Cashflow is king – this is always true in business but never more so than in a recession.

As part of our Raising Giants app, we spend five minutes with the world’s top CEOs and Founders to inspire our own world-leading Founders on their journey. We’ve cherry picked five of their answers to the question: ‘Any tips on cash flow for new businesses starting out?’ We’ve shared them below – well worth a quick read to refresh your cashflow attitude.

Mikhail Dubov, CEO & Co-Founder, Chattermill

For startup businesses that are at the start of their journey, my advice would be to choose your investors wisely. This can be hard – especially if you’re in desperate need of cash-flow. But it’s important that you don’t fall prey to investors who don’t fundamentally back your vision. If you can, pick investors who take a keen and active interest in your business success – beyond the bottom line. At Chattermill, we’re lucky in that our investors believe in our vision and future direction. This has been critical to our growth and success. If you choose the wrong investors, your vision and the very reason you started the business in the first place could end up running away from you. So my advice would be to choose wisely.

Monica Lagercrantz, CEO of BoardClic

Keeping your eyes on cash flow is a given. Don’t recruit too expensive “stars” when you’re starting out in business. It’s very hard to know exactly what roles you really need in the early stages of your business, and how each role will be defined in the context of your company’s specific needs. As you develop and grow you will be changing people and roles many times. In the early years, you should try to avoid paying the high salaries demanded by heavy hitters with big reputations, no matter how tempting it may be to splash out.

Rob Straathof, CEO of Liberis

Every penny counts. Small businesses should always try and negotiate the best and most cost-effective funding options from their finance providers that align with their overall business plans.
They should also try to find ways to extend payment terms with suppliers and get discounts if they pay them early. Even a 1% discount, if you pay two weeks early, leads to a 26% annualised rate saving.
Businesses should also make use of government taxes and subsidies. They can provide small businesses with things like Start-Up loans, tax grants and R&D subsidies which can really help a fledgling business with their cash flow.

Thomas Ramsoy, Neurons

Building a business depends on many things and one of them is a strong and well-established financial model. It is important to be able to properly forecast your future both from a revenue standpoint but also a cost perspective.
Building out a proper budget model which you can lock and then move into a working model which is dynamically updated, helps you properly see where you are compared to expected targets, both on sales and costs. At the same time, the working model makes it possible for you to make changes as you go, as things very often are not as you first expected.
Having the comparison makes it possible to see if you are above or below initial expectations and the working model helps you understand how your cash position will look in 6, 12, and 18 months from now. One important thing about a budget model is to ensure that it is reliable and that your expectations are achievable, meaning 100% should be possible and not something you can accomplish by luck.

Gren Paull, Intelligent Lilli

Don’t be afraid to spend money, but spend it as if you’ll never get anymore. You need to prioritise your spend, based on what you ‘need’ for your business, not what you want. That need should always have a return against it. Not necessarily a monetary return, but by realising that any spend must take your business further and faster. So think of a return in the early days as productivity, product development, market penetration, market attraction and more.
You have to think: ‘if I spend £5000 now, will that get me to a position in 6 months time as if I’d spent £20,000?’
Negotiate everything you can, but pay your suppliers early. If you need help from them further down the line, then they’re more likely to help you out if you’ve been someone who is reliable when it comes to making payments.
Finally, I would say model everything. Make as many different cash flow scenarios as you can, and keep iterating them as ideas happen daily and strategies evolve. You want to know at any given moment how many months you have before the business has to stand on its own two feet. That’s your goal. That’s your focus. Never detract from it. If you’re focussed on that, then you’re keeping everyone safe and secure in the business.

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