Cash Management for Start Ups

An Ateneo Graduate School of Business Advantage

I have a daughter who is into selling of beauty equipment on line. This November, her sales was almost a million. Not bad for a one woman show who does business on line, without ads and sales organization. All she got is a driver, internet connection, a cellphone, and the car of her sister.

However, when I asked her whether she got plenty of money, she said she still needs to borrow; she is cash short. I asked her why? She said she accepted pdc. What?

Some comments and observation:

l. Early in the ball game, if you are playing the price game, go for velocity of money, maybe low margin but mostly cash;

2. If you must accept pdc or credit: grant only to people you know, price the credit terms higher (to cover your risk) be sure your downpayment covers the COGS in case your buyer is a bad risk;

3. If you must grant credit; increase your credit lines; match your receivables with your payables; if you do not have credit; avoid credit terms.

I hope she gets wiser. Kids now do not accept advise from their parents; even if the latter has experience and knowledge

On Line Business for Beauty Products by my Daughter

My daughter does SEO work for main contractors in US, Australia, UK.  But she is aware that this is a short term work, because as knowledge grows and spreads, there will be less demand for SEO.  It is new now, but very soon, it will be known by everybody.

So,she does on the side, on line business for beauty products and equipment.  Marketing under the name NYX, she does brisk business, using the intenet and SEO power.  I always wonder why she is on the top of the list of the web page and other social media.  She operates on the business model of low cost, low overhead, focused ptm, and low selling price.