better business blog

Tips and stories to add value to you and your organisation

Beware The Big Order

17 May 2015

Too much can be bad for you. Too many hotdogs can make us fat. Too many late nights can wear us out. Too many shoes can overflow our wardrobe. Ok, too many shoes aren’t really that bad, but you get the point. In business people are often running to get more customers and more work and always strive for more more more. It is tempting to bid for ever larger orders and work hard to make sure we win them, but danger lurks.

The danger is that in our enthusiasm and ambition to be bigger and better we fall into the trap of over-trading. This could be the downfall of our business, because we focus all our efforts and our cash on servicing the juicy big order and forget to find time for all the little orders, that bring a steady stream of cash into the business and effectively keep the lights on.

We may have experienced this if we are a smaller business, or a sole trader, when we get ‘the big one’ and work night and day to prepare for it. We can be dazzled by the prospect of a big win and heavy profits – it’s human nature to be seduced by success. Be careful…we need to keep a sharp eye on our cash flow and our sales pipeline, in order to make sure our business bedrock is firmly in place and not being subtly chipped away.

A few years ago the MD of a manufacturing business won a big order and hired lots more staff. He started paying them wages and buying stock. The big order promised to transform his business and provide capital for further expansion. Time passed and his team worked hard. Then one day the money ran out and because the customer wasn’t interested in a part order he was unable to ship any goods. His business was transformed into, well into nothing. He ceased trading.

So the next time we plan a big new event, decide to buy new equipment, or get the chance to double our turnover we need to stop and think and ask –  what would our accountant say?

Next week: A Mindful Poem