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Cash flow – tips and tricks

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A remote farm in regional Western Australia has developed a formidable export business after daring to be different.

Yabby farming seems like an odd diversion for a family raised on producing sheep, wheat and barley. Yet for Mary Nenke and husband Michael, a simple motive led to their decision almost 20 years ago to move into aquaculture – they needed more cash.

“There was a crisis behind our business – we didn’t have any money!” says Mary Nenke, co-founder and director of Cambinata Yabbies. “Going into yabbies commercially was related to ‘the recession we had to have’. We had four children in education in the city – more than $100,000 a year to educate them in today’s dollars – so we needed more money.”

The decision has paid off for the Nenkes, who have created a great Australian family business on their property 300km south-east of Perth near the small wheatbelt town of Kukerin in Western Australia.

So what cash flow lessons can we learn from Nenke?

1.  Prepare for the worst

“Our greatest challenge is continuity of supply. Like all agriculture, supply is directly connected to water and therefore the weather, which we cannot control. Fortunately, unlike grain crops, rain can come summer, winter, spring or autumn – as long as we get enough to fill the dams, our yabbies will grow. Drought is devastating for supply and customer satisfaction.

2.  Stay on top of money matters to save your business

“Have a good accountant and a good accounting program. Look carefully at where overspending is occurring and why. Take action – this may mean reducing unnecessary spending or it may be increasing your prices, particularly in current markets where fuel is increasing costs directly and indirectly. “

3.  Growth is expensive

“Part of our learning curve was that growth can hurt and, when too rapid, can result in severe cash-flow problems. Growth meant more money for buildings, transport, equipment, supplies, fuel and yabbies. There was also the cost that came with increasing our holding capacity – that is, stock on hand. The stock had to be paid for before we were paid!”

So, if you’re looking to work on your business rather than being stuck in it, book in for a complimentary business assessment today with Switzer Business Coaching

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Tuesday, June 01, 2010

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