Companies often fail because of a shortage of cash, even while they're profitable.
Companies often fail because of a shortage of cash, even while they're profitable.
And although profits from a business venture are a measure of its success, the constant
flow of cash in and out of a business is vital.
Cash-flow planning is critical, therefore, to the survival and growth of a business,
and unless cash is available at the time required, the business
may have to close its doors.
For owner of Welshpool-based The Foodline Group, Justin Anderson,
turning his business into a cash-flow-positive operation has been an
immense struggle.
A boilermaker by trade with "no idea about business",
injecting a flow of cash into TFG has been no easy feat, particularly
when trying to tame the company's "wild and out of control" growth at
the same time.
TFG is among a group of four companies - Foodline WA, Austline Fabrications,
Foodline Projects and Pumpline - providing specialised products and
services to the food and beverages industries nationwide.
Established in 1995, the company has enjoyed rapid growth under the
direction of Mr Anderson and his partner, Vanessa.
"We created the businesss, which stemmed from contracting to food and
beverage companies initially in WA, and as it grew we were
able to expand our services to customers and clients and our reputation
within the food and beverage industry locally went from strength to
strength," Mr Anderson said.
"From this time we developed and grew our other businesses, which would
complement our range of services available to our clients.
"A major challenge we faced, though, was to remain cash-flow positive.
With four companies, this was an enormous challenge.
"With rapidly growing businesses stretching our resources to capacity,
this was a challenge we really needed to overcome to stay in business."
To overcome this challenge, Mr Anderson undertook a business course at
Curtin University of Technology and quickly learned the importance of turning his businesses into cash-flow positive operations.
"From the knowledge gained from this process we were able to set in
place an integrated management system (IMS) with procedures for all financial
management tasks, followed by monthly dashboard meetings," Mr Anderson
told WA Business News.
He said by documenting and auditing all aspects of the business, and
comparing each of the four companies at dashboard meetings that
documented various trends, TFG had become a profitable operation.
"All the TFG companies are cash-flow positive now and aged receivables
are carefully monitored and analysed," Mr Anderson said.
"Through the long and tenuous journey of developing and implementing the
IMS process, coupled with continual training and proactive management
with a strong focus on human resources, we have achieved this outcome in
each of the TFG companies.
"I think that our fundamental belief is that, for us, growth is a way of
life, and we have to grow at all times.
"To grow as a company in strength, not necessarily in size; to further
grow personally, in spirit and mind, and most importantly to further grow
together."
Established in 1995, Foodline WA provides stainless steel pipe work,
fabrication, machine installations and maintenance work to a wide range
of companies, covering breweries, dairy, soft drink and food processing.
Austline Fabrications specialises in carbon steel welding, polishing,
pressure testing, complex pipe spooling and drafting, among other
fabrication jobs.
Foodline Projects has built alliances over the years with companies
in the food and beverages sectors, to manage their projects, while
Pumpline offers surface preparation and coatings solutions to
the spray and pump industry.
