Tax & admin 22 February 2018

How I boosted cash flow overnight to help my small business grow

Unlike demand, overhead costs are a year-round challenge

Writing for Business Advice, Maria Savage, owner and director of food chain Bombay Burrito, explains how opting for a short-term cash flow solution helped her manage seasonal demand.

For many years, it was my dream to have my own food business, and in 2012, this became reality when I started up a street food stall, Bombay Burrito, with my partner. As the name suggests, we specialise in wraps filled with a variety of curries, fillings and chutneys. Later that year, our business reached a new high as we opened our first bricks-and-mortar location in Angel, central London.

Bombay Burrito owner Maria Savage

Over the last five-and-a-half years, it’s been a privilege to build a business I love, in an industry I’m passionate about. But running any small business has its share of challenges, as well as joys – and one that I’m sure many other entrepreneurs can relate to is that of cash flow.

Cash flow is the lifeblood of any small business, and as a hot food business, we have cash coming in the door with our customers every day – but it can vary. We’re situated right next to a university and are very popular with students, but they’re only in term nine months of the year.

Our slowest season is the summer, when they are away. This is coupled with the fact we serve curry and hot wraps, which aren’t in such high demand on a 29°C August day!

Our overhead costs are, however, year-round. This requires a careful balancing act against seasonal fluctuations in sales. Whilst paying for priorities like staff wages, rent and keeping the lights on, it can be difficult to take the actions we need to grow our business – for example, developing new dishes, hiring additional staff or redecorating our restaurant.

Launching a new menu to tackle the slow season

In July last year, we wanted to take positive action for our business so that the summer months would no longer be our “quiet” period. We planned to launch a new menu of salads, designed to increase sales through an offering better suited to warmer weather.

In order to do so, however, we needed additional funds to spend on recipe development, sourcing new ingredients, and raising awareness of the new menu through a leaflet marketing campaign, targeting local offices to encourage lunchtime orders.

“Curry and hot wraps aren’t in such high demand on a 29°C August day!”

This also meant hiring new staff to distribute the leaflets – whilst making sure that there were enough helping hands in the restaurant to maintain high levels of quality service as we got to grips with creating the new offerings.

However, we’d just paid both our quarterly rent and VAT bill, and given quieter sales volumes at that time of the year, our cash flow situation meant we couldn’t invest in these activities.

Cash flow boost can go a long way

At first, it looked like we wouldn’t be able to go ahead with our growth-focussed action plan – until I found out about Barclaycard’s Transfer to Bank facility.

Our business banking account is with Barclays, and we discovered that we could transfer a portion of the unused credit on our Barclaycard business credit card to our Barclays business bank account as cash, interest-free for three months.

It was really straightforward: I made a phone call, answered some questions about our plans for the cash, and we received this within a couple of days.

This facility gave my business the cash flow boost we needed. The funds enabled us to purchase additional ingredients, as well as extra hours for our chefs to develop and taste the recipes. It also meant we could print new leaflets and pay the additional staff required to distribute these.

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Our new summer menu was a huge success with both office and residential evening orders. In fact, increased awareness through the leaflet campaign led directly to an event catering opportunity for the company, helping us to develop an entirely new revenue stream.

The new menu had a direct impact on our revenues: sales for the summer months of July, August and September increased by almost 30 per cent year-on-year. As a result, we were able to repay the balance on our Barclaycard within the interest-free period of three months.

My key takeaway

So, what would be my key takeaway? Well, I’ve learnt that there are more options out there for small businesses than I realised, and they don’t necessarily require large or long-term loans.

My business needed a short-term cash flow solution, so that we could take steps to secure a growth opportunity, and that’s exactly what we found.

By taking time to explore the options in the marketplace, including those you might not already know about from current partners such as your business bank, you can create the breathing space you need to act and develop new revenue streams – while meeting overheads and making sure that the lights stay on.

Maria Savage is owner and director of Bombay Burrito

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