Managing bills can be a headache for everyone, whether you live alone or in a shared house.
Start Up Loan recipient Jon started bill management service DividaBill, which sets your bills up for you and manages your monthly payments. Jon talked to us about the importance of cashflow as his business has grown and sought investment.
What did you use your Start Up Loan for?
The Start Up Loan was the first stage of investment that the business received, so we used it to develop and build a prototype of DividaBill that got us a few sales. We then used the money from those sales to develop the software further.
How did you manage your cashflow as the business grew?
Initially when we started the business we were using an Excel based model to keep track of our cashflow. Even now, we still use this to double check the numbers, but we are in a place where we can afford to outsource our accounting to a specialist.
How important has cashflow been when looking for investment?
Your cash flow needs to be up to date and accurate; you need to show the investors that you are competent. They want to see that your business is going to make money – is it a profitable business and is it robust model? We keep a document ready for pitches to investors. It includes a summary of the income and costs of the business on a monthly and yearly basis. From our experience, most investors want to see your cash flow forecast for the next one to three years, but often they will ask for up to five.
What types of investment has DividaBill received?
The business has received more than £250,000 in investment so far from a variety of sources like grants and equity investments. We are now looking for a third stage of investment to put towards further growth and development.
What advice would you give to small business owners on managing their cashflow?
Financials are one of the most important aspects of any business and a lot of small businesses try and do this in house. As your business grows and becomes more complicated, you will need to focus more of your time on making business decisions. We have used a lot of different tools including online software packages, Excel and accountancy firms that specialise in small businesses. My advice would be to get a good cheap accountant and then to find what combination of tools, software and services work for you. Sometimes its worth spending a little on software, whether it’s a spreadsheet or online tool, that makes it easy and quick to manage for your business.
Have you used any of the support provided by Start Up Loans?
Without a mentor we would not be where we are today. As young people starting a business, the knowhow and experience that a mentor brings is crucial. Our mentor prepped us for meetings and helped us to research in to industries. The funding opportunities that he knew about were crucial to our early survival and enabled us to get through to further investment.