The Workup team has spoken with many small business owners over the past couple of years, ranging from start-ups to scale-ups to well-established small businesses.
What stood out was how often these owners faced the same day-to-day challenges, causing regular stress and sleepless nights. Running a business is always hard, especially with the responsibility of employees, clients, and loved ones relying on you.
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Again and again, we heard about the same operational issues cropping up. Below are the five most common pain points that were identified, along with strategies to tackle them effectively.
1: "Cashflow, cashflow, cashflow. I need to make payroll each month"
Cashflow is the lifeblood of any business, but for small business owners, it often feels like a never-ending juggling act. The need to make payroll every month isn’t just a financial obligation, it’s a fundamental aspect of maintaining team morale, retaining skilled employees, and ensuring the business can continue operating.
Why is this a challenge for small businesses?
- Thin Margins and High Stakes: Small businesses operate on razor-thin margins and lack financial buffers. They don’t have the luxury of absorbing significant losses or delays in payment.
- Client Payment Delays: Small businesses rarely have the leverage to enforce strict payment terms, and chasing overdue invoices takes up valuable time that could be spent on growing the business. When payments don’t arrive on schedule, it puts payroll and other essential expenses at risk.
- Untracked Non-Billable Hours: Non-billable time, whether it’s spent on internal admin, rework, or client communication, can snowball into hours of lost productivity. When time isn’t tracked effectively, it becomes invisible to the business owner.
What can be done?
- Implement a Rolling Cash Flow Forecast: Use forecasting tools available in systems such as Xero or QuickBooks to project your cash flow for the next 12 months based on actual data and anticipated changes. (For a comprehensive guide on creating a rolling cash flow forecast, including step-by-step instructions and templates, you can refer to this great guide from Bench)
- Track Billable vs. Non-Billable Hours: Use time-tracking tools like Toggl, Harvest, or Workup to differentiate between billable and non-billable hours. This clarity helps you identify where resources are being spent. Workup will shortly be publishing a comprehensive step-by-step guide to help you manage billable vs non-billable hours.
- Accelerate Receivables: Often it is unpractical to shorten debtor payment terms, but solutions are available, such as offering small discounts for early payment, minimise time-to-invoice (watch this space for a detailed article on this in the near future!) or consider retainers or advance payments for long-term projects.
- Build a Payroll Reserve: Set aside surplus funds during peak revenue periods to cover lean months. Use tools like Wise or Revolut to automatically transfer a percentage of incoming revenue into a reserve account
