Cementing A Working Capital Foundation In Masonry

Words: Isa Stein

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Running a business is tough. We know, we have done it. We also know masonry businesses have unique financial challenges, like any business. One of the most difficult parts of the journey is managing cash flow and covering gaps in working capital when you need to. We hope this guide to managing cash flow and securing financing is helpful. 

First things first, you should make sure you stay open-minded to different ways to manage cash flow. Here are our twelve favorite tips:

1. Quick Quotes, Quicker Invoices: In the world of masonry, time is mortar – the quicker you set it, the stronger you stand. Start by sending out those quotes faster, and once the job’s done, get those invoices out quicker than cement dries. This will ensure money starts flowing in.

2. Payment Terms – Short and Sweet: Keep your payment terms short. Negotiate terms like 'Net 15' instead of 'Net 30'. It’s like telling your clients, “Let’s set this payment as quickly as we set bricks!” This can greatly reduce the waiting time for cash to hit your bank.

3. Early Payment Discounts – The Carrot Approach: Who doesn’t love a good discount? Offer a small percentage off for early payments. It's like a little nudge to your clients – a sweetener that can accelerate payments.

4. Deposit and Progress Payments – Building Blocks of Cash Flow: For larger projects, don't shy away from asking for a deposit or progress payments. Think of it like building a wall, one layer at a time. This approach ensures you have a steady stream of cash coming in to cover ongoing expenses.

5. Inventory Management – Lean and Mean: In masonry, every brick counts. Apply the same principle to your inventory. Keep it lean to avoid tying up cash in surplus materials. Use inventory management software to keep track of what's in stock and order just enough to meet demand.

6. Expense Tracking – Watching the Pennies: Keep a hawk-eye on your expenses. Small leaks can sink a great ship. Regularly review your costs – be it materials, labor, or overheads. This way, you can spot opportunities to cut costs, like negotiating better rates with suppliers or reducing wastage.

7. Financial Forecasting – The Mason’s Crystal Ball: Use financial forecasting to predict incoming cash and outgoing expenses – it helps you plan and avoid cash flow surprises down the line.

8. Building Relationships with Suppliers – The Art of the Deal: Forge strong relationships with your suppliers. Sometimes, they can be flexible with payment terms, giving you a longer runway to pay. It’s a two-way street; good relations can lead to discounts or more favorable payment terms.

9. Automating Payments – Set It and Forget It: Use technology to automate payments for regular expenses. This can help you avoid late payment fees and manage your outflows more effectively. It's like having an autopilot for your cash outflows.

10. Diversify Revenue Streams – Don’t Put All Bricks in One Basket: Look for ways to diversify your services. Can you offer custom brickwork, restoration, or consultancy? Diversification can open up new revenue streams and make cash flow steadier.

11. Monitoring and Adjusting – The Dance of Numbers: Regularly monitor your cash flow statements. Adjust your strategies based on cash flow trends.

12. Dealing with Late Payments – The Gentle Nudge: If payments are late, don’t hesitate to follow up. A friendly reminder can often do the trick.

By implementing these strategies, you'll keep the cash flowing. Remember, managing cash flow is not just about stacking bricks; it's about building a fortress that withstands the test of time and the market's ebbs and flows.

Now, we live in the real world and know even doing all of the above won’t fix working capital gaps, so it is important to understand the universe of capital options if and when you need them. Here is how we bucket those six options.

  • Self-Funding & Family Loans: Just like mixing cement, funding your masonry business from your own pocket or with the help of kinfolk can lay a strong foundation. But tread carefully; mixing family and finances can be tricky.
  • Line of Credit: Think of it as your financial scaffolding. A line of credit is there to support you when those unexpected expenses hit, like a sudden need for new trowels or a bulk order of limestone.
  • Bank Loans: Banks are slow and traditional but can make sense. Be prepared for a lot of paperwork and some waiting. It's a solid choice for large, well-established masons.
  • SBA Loans: With the backing of Uncle Sam, SBA Loans are ideal for masons who've laid a solid groundwork with good credit and a robust business plan. But patience is key – the government moves slow. 
  • Equity Investors: This route is for large, growing businesses who are okay giving up a degree of ownership and maybe control. Venture capitalists and angel investors can elevate your enterprise to new heights, but they'll likely want a meaningful piece of business. 
  • Online Lenders: The modern-day banking option. Quick and simple. It’s free to apply and usually smart to at least have the option. 

In the end, funding your masonry business is all about choosing the right stone for the job. Choose wisely, and may your business be as enduring as the walls you build!

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