Who can you lean on in a business cashflow crisis?

DPM Design & Build Ltd – Their story

On 27 February 2020, entrepreneur Marius Visser registered DPM Design and Build Ltd with Companies House. Three weeks later, the UK locked down in response to the global coronavirus pandemic, putting Marius’s new business in real danger of going under. 

"I'd bought supplies for a couple of big jobs when lockdown hit and merchant yards closed down. My cash and my supplies were locked behind gates and without them I couldn't finish jobs and get paid. It was a cash flow nightmare and I couldn't see a way out."

Marius quickly realised that there was no government support available for his fledgling business (it was too new). He had a lot of self-employed people contracted to him and relying on him for work and income. It was a situation sadly familiar to many independent business owners.

When a fellow small business owner recommended asking Barclaycard Business for help, Marius turned to us straight away.

Business Relationship Manager, Dee Betts, was at the other end of the phone:

"Marius got in touch to explain he had goods and cash stuck with suppliers, which meant he couldn’t complete jobs and invoice for them. I'm so pleased we could help him with a business credit card, to ease his business cashflow issue and keep DPM Design & Build Ltd up and running."

Having been a Barclays and Barclaycard customer for more than 10 years, Marius had complete trust in the heritage of the brand:

“There's every chance I'd have lost my business without help from Barclaycard Business, and from Cartley Landscape Supplies. They were so kind and really threw us a lifeline by opening their yard and letting us have supplies on credit.”

Marius has since paid Cartley Landscape Supplies back in full, and cannot stress enough how important it is to build and maintain good relations with your supply chain.

Since his very early business scare, Marius is relieved that business really picked up and he’s expecting to turn over in excess of £400K in the 12 months from May 2020.

During lockdown, more than half of DPM’s jobs were put on hold, particularly the indoor ones like bathroom remodelling. On the other hand, a lot of people realised they want to entertain in their gardens. Which meant DPM was flat out building BBQ areas and pergolas, landscaping gardens and launching their new artificial turf division – Home Counties Turf.

So, not only has the business survived a near-fatal cash flow crisis, but it has diversified and continues to thrive and have a positive future.

Find out more about the Flex Business Credit Card, and other business cash flow solutions.

Crowdify Global – Their story

Serial entrepreneur James Rix, found himself down £50K a week across his group of businesses:

“It was a heart in the mouth moment. I could’ve lost everything I’d worked my whole life to build.”

But he stayed focused, and realistic, sharing that at that moment he realised two of his businesses would probably go under, but one had a real chance to shine.

“I spoke to my mentors and owners of competitive businesses every day at the start of lockdown. We shared feelings, ideas and views of the future,” said James.

“I was also really glad to have built strong relationships with suppliers and partners, like Barclaycard. We used our Barclaycard business credit card to not only manage cashflow at the beginning of the pandemic, but also to invest in the business, for the future.”

This diversification and adaptation means StreetPR, Rix’s promotional staffing agency, and Wicked Student Nights, can take a back seat while the events industry recovers. The first runs on small margins and huge overheads, and it was owed £60K. It took another £30K hit when Rix paid his staff, despite not being paid by clients. The second, on the other hand, is a cash-rich business – that has the reserves to last a year closed, with staff furloughed.

With these two businesses out of action, Rix grouped together his ‘A team’ – specialists from across his group of companies, to work at Crowdify Global, his digital marketing agency. In just three months (April to June 2020; during lockdown), Crowdify’s revenue sky-rocketed, by 670% - from £7K a month, to £54K. Just under £30K a month comes from around 20 retained clients, and the rest from one-off projects that Rix says, more often than not, lead to retained work.

Interestingly, this growth not only comes from companies realising the huge potential of selling online, but also from wholesalers becoming customer facing. The latter is a particularly interesting shift, with wholesalers losing revenue from physical stores that had to pull down the shutters during the coronavirus lockdown. With the opportunity to sell directly to customers online, Crowdify’s expertise (in bringing brands up to date and focusing on returns from paid advertising and SEO) continues to be in huge demand in this area. 

Sloane's Hot Chocolate - their story

When the UK was ordered to lock down, coffee shops closed and Brian Watt, owner of Sloane’s Hot Chocolate lost a huge chunk of his business (selling his hot chocolate products to cafes) overnight.

“We thought, shall we just furlough the business, close it down?”

Despite many sleepless nights about business cash flow, the situation forced Brian and his team to adapt and find different opportunities.

What Brian saw from the whole COVID situation was that they’d sit down and make a plan, and say ‘ok, this is we’re going to do for the next month, this is what we’re going to focus on’, then something would come out of the woodwork in terms of an opportunity and they had to change their focus totally and say: ‘ok, put that plan aside, here’s the new plan’.

And they also saw that behaviour from their customers:

“Some of the coffee shops that were closed initially then opened up as takeaways. We worked very hard to help them do that. We reduced the size of the order they could take from us, so rather than a minimum £100, we cut that to £50. We tried to help them help us, because the more of them that opened, the better it was for us.

“We also saw that with some of our farm shops who adapted to being hamper companies. An order would come in from out of nowhere from one of our farm shops to say can I have a 100 of this unit because it’s in a hamper we’re doing and it’s selling all round the UK. So those are the kind of changes we had in our business.” In this time of constant change, Brian’s top tips for managing business cash flow are:

1. Write it down. When you wake up at 4 o’clock in the morning sweating about cash flow, write down the three things that you are going to do about it tomorrow. Then get back to sleep.
2. Ask new customers to pay up front. It’s another way of bridging cash flow gaps.
3. Have honest conversations with suppliers, customers and partners. You may have some of your larger customers telling you they will be paying later if this happens go back to you suppliers and ask them for more time to try and bridge that gap. Equally important is to build relationships with partners. When lockdown hit, we sat with Barclaycard and explained our situation. They really understood the change and helped us out by giving us extra time to make repayments. 

Barclaycard Business Manager, Rob Whittle, works with small businesses like Sloane’s Hot Chocolate every day. He share his three top tips for healthy business cash flow:

1. Think short and long term. Sometimes, it’s better from a cash flow perspective to say no to really big orders. The last thing you want to do is focus on a big order that you’re not going to get paid for for months, and actually by the time the cheque comes through, you’ve had to close the gates.
2. Work with your payment provider. In regularly talking with SME customers, we always find that they tend to be in the middle of a tug of war. They’ve got suppliers asking them to pay sooner and they’ve got customers paying later or not paying at all. So knowing that cash is king and that cash flow is absolutely essential for our customers, it’s  imperative that we give our them ability to pay later and get paid quicker. This means they can actually reduce and manage that cash flow timing to allow them to pay their rent, to pay for their stock.
3. Find new revenue streams. I think one of the biggest things is to understand where that business owner wants to take their business first of all. If they’ve got the ability to potentially go to a virtual payment area, we can look at the opportunities to create them a website and allow people to take those payments online or over the phone.

• ^*All stats referenced in this article are from the same source (unless otherwise referenced): Research was conducted online by YouGov on behalf of Barclaycard between 1 – 21 April 2020. YouGov polled 576 senior members of staff working in UK SMEs, weighted by region to reflect SME distribution in the UK. This data has been compared to Barometer data, run by YouGov with 562 senior members of UK SMEs between 10 – 24 January 2020.
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• ¹Taken from Barclaycard Payments proprietary data on 9 July 2020.