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Brian's
Introduction
By
Brian Walsh (Founder & CEO of
Entrepreneur.co.za)
The most common challenges to be faced, often
more than once, are financial challenges. There
are various types of financial challenges, such
as outlined below.
I’m not making enough money
When you realise you are struggling to make ends
meet, you need to act both defensively and
offensively. By this I mean look at cutting
costs both in your business and personally
before they cause problems for you. At the same
time, aggressively pursue new work or clients in
an effort to make your lack of income temporary.
I have a client who hasn’t paid
A client who is refusing to pay or making false
promises should be dealt with sooner rather than
later, and here, I don’t mean taking the legal
route straight away because that generally kills
any future relationship. My suggestion is to try
to establish direct personal communication. Try
to find out why there is a problem. In so doing,
you can show empathy and hopefully come to some
sort of an acceptable arrangement. Be
persistent, and put as much of the
communications in writing as possible. Also, get
the client to communicate in writing as this
will help if they fail to comply. As a last
resort, you may have to go the legal or
debt-collecting route.
My clients always tend to pay me late
This often means that as a result, you’re paying
your bills late and possibly defaulting at the
bank. It’s very difficult to budget and pay
bills on time when you aren’t getting paid on
time. This is a common problem, especially in
the service industry. A common factor in this
industry, is that the client may directly or
indirectly delay the conclusion of a contract or
job, and therefore not pay on time.
There is no easy way of dealing with this – it
tends to be something you have to work on in
terms of relationships. Firstly, keep your bank
informed, and ensure you have signed orders to
the effect that you will be receiving the money.
Your bank can often assist by supplying an
overdraft facility to help cover expenses while
you wait for payments.
A good way to manage this is to build a fund
that you use to finance the consequences of late
payments yourself - once you get paid, you can
replenish the fund (which could be in the form
of a savings account attached to your operating
account, for instance). I also recommend you
remind your clients about payment well in
advance – don’t leave it to the last minute to
enquire about
on-time payment.
I owe people money and they are threatening to
sue me
Firstly, communicate – the golden rule is to not
stop talking to your creditors. By keeping
communications going, unnecessary legal
complications can often be avoided or delayed.
Be honest about your situation; don’t lie about
it, especially when you owe another
owner-managed businesses. They can often relate
to your problem and empathise because they have
been there too. Secondly, try to pay something.
This will ensure that aggressive legal action is
not taken.
We will deal with different financial solutions
in much more detail in a forthcoming guide which
should be available by May 2006.
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