Industry sector:

Driveways and patios: Cash sales

'Cash sales' means all income from paving services and your other main business activities which you receive at the time when you finish a job (or you receive at a particular stage of a job, depending on how you bill your customers - perhaps you will sometimes ask some for a deposit up front to pay for materials).

Remember that Cash sales can include cheques, bank transfers and also debit and credit card payments (if you accept these), as well as actual cash received. Also include here any payments that you receive from finance companies.

To prepare your cash flow, you need to estimate how much income, including VAT if appropriate, you will receive over the next twelve months. To do this, decide what you will charge for the work you do and then estimate how much work you are likely to get. Take into account your working hours, remembering to budget for holidays and illness. Also remember that not all of your time will be 'productive' (will earn you money) - you may have to set aside some time for administrative jobs, marketing activity, surveying new projects, chasing up late payments and so on. Remember that it may take several weeks or even months after you begin trading to build up to your full earning potential.

Sources of work

When you make your estimate of how much income you will earn, think about where your work is going to come from. Decide what your approach to advertising and marketing will be. Will you, for example, do a mailshot and then wait for the telephone to ring? Maybe you will try door-to-door or even telephone selling. Perhaps you'll be listed as a local 'approved contractor' by a well known paving block manufacturer. Possibly you know some builders and developers who will use your services on a regular basis and will put work your way.

Seasonal factors

Most or all of your work is likely to be done outdoors, so there may be times when very wet weather prevents you from working at all. Moreover, demand for paving and other hard landscaping services is often highest during the spring and summer months. For this reason, business may be quieter during the winter months than in spring and summer.

The local market

Three very important factors that will affect your business are:

  • the number of potential customers
  • the type of products and services that they are likely to require
  • the amount of existing competition

Consider doing some market research to find out more about your potential customers and your competitors - this will help you to identify your own place in the market.

Also bear in mind the following points when estimating your Cash sales:

  • your reputation is very important. Building a reputation for quality, honesty and reliability among your customers will help to ensure that you get repeat business and recommendations. It can also affect the rates that you are able to charge
  • projecting the right image for your business will help you to maximise sales. You could, for example, look into becoming a manufacturer-approved contractor, or joining a reputable trade association. Effective advertising and marketing can also be important and will help your business to fulfil its potential
  • There is a range of different work that you might decide to undertake, depending on your skills and experience
  • getting your prices right is crucial. Do you need to keep your prices as low as possible to attract customers, or can you charge premium prices for a premium service?
  • offering finance may sometimes help to attract customers who would not otherwise be able to afford your products
  • the amount of work potentially available will depend on how far you are prepared to travel to a job

To help with your decisions, click on the checkpoints for guidance. Once you have worked out a Cash sales figure add it to the relevant field in your cash flow forecast.