Business in the construction industry and their success can be affected by factors that other businesses wouldn’t even consider. Weather, materials, working conditions – all of these can have an impact on a company’s ability to successfully complete projects. Cashflow is always uncertain for any business, but for companies working in construction, knowing how to manage fluctuating cashflow is imperative.
Unfortunately, during times when income is slower, the financial costs of running a business are not. Paying rent for premises, wages for workers, tax etc. – you need to have cash at your disposal to keep up with payments.
It is imperative that – even in times that are lucrative – you are prepared for the slow times of year:
Identify the high and low seasons
Having an idea of when your income/profits will fluctuate allows you to formulate a cashflow forecast that will contribute to the development of an accurate budget, helping you to be better able to prepare for the months with less income.
Make your stock estimates as accurate as possible
While it may be tempting to order extra stock / supplies for peak seasons with high demand, grossly over-ordering can result in a surplus at the end of the season. By the time the slower months have arrived, you may not be able to move the extra stock and you could make a loss.
Put money aside in high seasons
Being tempted to splurge during months of high income is understandable – wanting to invest in or buy products that may better your business is always desirable for business owners. However, putting aside an amount rather than spending all of it will give you a backup in times of need.
The Artisan Industry is certainly a difficult one to master – turning your hobby into a career comes with plenty of ups and downs. Knowing the key mistakes to avoid and the top tips to follow is essential for any business.