Hi guys. It’s Nishi Patel from N-Accounting, and in today’s video. I want to talk about why spending loads of money on equipment purchases can really mess up your cash flows.
So one of the most frustrating things I come across when I start working with new businesses is they don’t understand how much money they actually need to invest in marketing. So quite often, I come across new business owners who have taken a lot of pride in telling me about the brand new van they’ve bought. It only cost them £25,000 and surprisingly they pretty used up all of their start up funds to buy that van. So what I wanted to do is just explain some of the alternatives to buying a large piece of equipment in your business, like a van and why there’s alternatives that are important.
So let’s say you’re starting off a business. You could buy the best van in the world but if no one knows that your business exists, you’re not going to have any customers, you’re going to have any money coming in. So it doesn’t matter how good your van actually looks. Okay? I mean this can apply to lots of other things like starting a business and doing up your home office on day one. I know you want to feel like what you want to become but still it’s taking a huge amount of your cashflow away, tying it up, and then you don’t have access to that cash flow.
Ultimately, the most important thing in a business, especially new businesses, is having people understand what you do, where you are, how you do it and how you can help them. And that’s why the most important thing a business should really spend money on is marketing whether they do it in-house or they have to hire someone to do it, whether a business owner does it themselves, in which case they’ll end up doing less fee-earning work so there’ll be a financial hit there or whether a business outsources it.
So this is one point I just really wanted to get across to you guys. If you’re thinking of buying a gigantic purchase, like a van or a home office, or even smaller purchases like just getting new laptops for everyone in the office, just have another think and think what the alternatives are. Often you can take an old bit of equipment you’ve already got and give it a new lease of life, either by getting it refurbished or wrapped. You can sometimes hire the equipment instead. I know in the long term hiring can seem more expensive but in the short term if you’ve got the opportunity to hire some equipment and then conserve your cash flow for your marketing budget, then that can often be a really good idea.
So if you want some help with your cash flows and understanding them better and planning them better, then get in touch with us. We offer a no-strings-attached free strategy session where we talk about how to improve the cash flows and profitability in your business so it can help you live your dream life.