How to Manage Investment Cash Flow and

Maximise ROI for Small Businesses

When a business receives investment capital, the injection gives it
an opportunity to develop a potentially lucrative proposition. It is
able to get the ball rolling to develop that product, set up an
infrastructure or expand into markets. Often enough too the capital
runs dry short of achieving the objectives, at times, missing targets
by a wide margin. The possible reasons for this are, firstly, there
could a lack of depth and detail when developing initial cost
projections. Secondly, cash outlays had not been well-managed and
tagged against project milestones. Thirdly, insufficient thought and
effort had been allocated for planning. Lastly, the greatest
misconception of small businesses and startups is that the act of
"running a business" does not yet occur during the pre-revenue and
developmental stages. In fact, it is when teams "put their heads
down" too heavily on the innovation that ultimately, places them at
risk of getting de-focused on the direction. Applying the principles of
business operations process management is as vital for large
corporations as it is for small businesses to remain vigilant on
expenditures as measured against progress, ROIs, performance
KPIs, market requirements and their impact on future product
success and profitability.
Regardless of size and revenue, businesses are constantly faced
with bills to pay for rent, salaries, suppliers, inventory, professional
fees, advertising, equipment purchase and maintenance, delivery
and administration costs. Although the matter of receivables and
profits do not arise at the pre-revenue and developmental stage, the
issue of expenditure accountability and justification of deliverables
is no less mandatory during this phase. Here are some tips on how
to maximise value on every penny expended:

Research on and negotiate the best deals

possible
Whether it is dealing with space rentals, equipment leasing or
product design services, never hesitate to haggle to obtain the best
possible advantage. However, bargains cannot be struck without
first having a thorough knowledge of the going market rates,
available expertise, customary deliverables, prevailing business
practices and the standard value-add options normally offered.
There is no better way to do this than to conduct comprehensive
research, including performing data comparisons. Price points are
not the only considerations when negotiating. The entire process

from purchasing, phased delivery schedules, communication,

support, payment schemes and credit terms should be factored in.
For example, the longer the terms of payment the better it is for a
business. Be bold to discuss possible discounts on bulk purchases or
early payments. Where suppliers may charge higher premiums for
guaranteed support, explore the possibilities of this support being a
complementary add-on for long-term contracts. Always revisit
existing purchases regularly to work out better deals with suppliers,
especially where there may be incremental opportunities in future.

Implement good project management

"Good project management discipline stopped us from spending on
projects that fail", states Ron Kasabian, general manager at Intel,
USA (PMI). Disciplined project management breaks strategic vision
down into its elemental objectives and sets a roadmap towards
achieving them successfully. It is a means of identifying the
sequence of activities and the range of resources indispensable to a
project such as people, systems, space, budget and time. All of
these resources interoperate within a planned undertaking that
places the specific and unique outcomes within view, and subject to
constant evaluation. Defining the project budget is vital in steering
expenditure into agreed efforts that have been validated to produce
the required outcome. A well-estimated budget helps to structure
the scope of the project in a way that controls how resources and
time are allocated to any individual task. In a disciplined project
management, the budget should be agreed and signed-off at the
start of a project. It should be subjected to regular formal reviews to
assess budget changes and impact, as well as to measure the
returns on outlays and stop injections into non-value-add activities.
Most importantly, taking a disciplined approach to project
management not only increases project accountability, but also
ensures visibility of progress as well as future requirements that will
influence purchasing.

Be clear about product and project

specifications
This is the essential mantra that underpins quality management and
good manufacturing practice systems. Establishing good
documentation of product and project specifications ensure that
design requirements have been formalised and agreed. It ensures
clarity of requirements and inputs when communicating with subcontractors and suppliers, outputs are adequate for verification, and
testing results meet expectations. In so doing, it also provides
assurance for more accurate cost estimations from suppliers and
exact budget allocations for a project. Errors and miscommunication

can be eliminated, and there is more certainty for having things

done right the first time. This would lead to minimising outlays on
corrections and re-working. Documenting specifications should
include details on materials, dimensions, measurements,
tolerance/clearance, acceptance criteria, limits, components,
software, hardware, sub-systems, conditions and production
processes. To be effective, all documentation exercise should
comply with the principles of good documentation practices and its
applicable requirements on change control, review, control of
electronic copies, traceability and risk management, to name a few.

Apply lean design and development methods

The lean design method transcends project management and
involves a more in-depth review of workflow and process execution.
Originally a manufacturing concept, its principles work in any
organisation seeking to opportunities to eliminate waste and slash
operational costs. The lean methodology forces an organisation into
the iterative review of customer needs and to fulfil these through
the most efficient and adaptable means. It involves the re-thinking
of what the value-add elements are in a process and applying only
those that directly accomplish the final product goals. Lean design
helps to achieve quality and profit at the source. This is
accomplished by adopting continuous improvement, monitoring,
validation, error proofing and standardisation at every step to assure
cost containment, highest returns on investment and best product
quality. When design requirements are matched to resource
capabilities, this helps an organisation to better focus scarce
resources on the most economical way to produce the best possible
product design.
Nealda Yusof is a medical technology writer and founder of
Semoegy.com. Click here to contact the author.
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Original article: http://medtechupdates.semoegy.com/2015/03/howto-manage-investment-cash-flow-and-maximise-roi-for-smallbusinesses/