Industry sector:

Fencing contractor: Cash sales

'Cash sales' means all income from fencing services and related activities which you receive at the time when you finish a job. Also included are any deposits and interim payments that you receive. Cash sales might include income from 'supply only' sales of fencing and decking materials too.

Remember that Cash sales can include cheques and, if you accept them, debit and credit card payments.

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 the goods and materials you supply. 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 will have to set aside some time for administrative jobs, costing new work, chasing up late payments and so on.

The local market

Three very important factors that will affect your business are:

  • the number of potential customers in your area - these might include domestic customers, commercial and industrial clients, building contractors and the public sector
  • the types of service that they are likely to require (for example agricultural fencing, security fencing, additional domestic landscaping services and so on)
  • the amount of existing competition

Market research will help you to find out more about your potential customers and your competitors.

Seasonal factors

Demand for some of the work that you do may fluctuate seasonally. For example, you might find that you do more garden fencing work during spring and summer when the weather is warmer and people spend more time in the garden.

If you offer emergency repair and reinstatement services and undertake insurance work then you will probably find that demand is highest between October and April, when storm damage is most likely to occur. Be aware though that it's not uncommon for home insurance policies to exclude fence damage.

Other factors

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

  • the state of the local property market is likely to have a significant effect on your sales. People tend to invest in maintenance and improvements just before they sell or just after they buy a house
  • other local factors can also influence demand - particularly road building and maintenance projects, agricultural and forestry activity and so on
  • your reputation is very important. Building a reputation for high quality and reliability among your customers will help to ensure that you get repeat business and recommendations. It can also affect the rates you are able to charge
  • projecting the right image for your business will help you to maximise sales. You could, for example, look into ways of certifying your quality standards, perhaps by doing all work to the appropriate British Standard
  • effective advertising can be important and can 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 and the amount of demand
  • you will need to set your prices at an appropriate level
  • the amount of work potentially available will depend on how far you are prepared to travel to each 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.