A growing proportion of businesses rely primarily on the Internet to operate, existing almost entirely online. Their workspaces, as well as their products, are often entirely digital. Many, and occasionally all of their suppliers and employees are likewise online, and exist as part of a much better connected global market than the physical world that most businesses function in.
Entrepreneurs often view online e-commerce stores as relatively easy ways to reach customers and build a profitable business. In actuality, online retailers face fierce competition and tend to be put into a difficult financial position by their very business model.
Tech firms need strong cash flow management skills to thrive. While these kinds of manufacturers are seen in the popular imagination as overflowing with cash, the reality is that they face the same financial pressures as other businesses, plus a number of other potential complications. Not only do they rely on long international supply chains, but they also occasionally face astronomical costs without any prior warning.
Wholesalers occupy an important, but difficult position between manufacturers and retail businesses. They work directly with manufacturers to efficiently import goods, and help retailers to access these affordably and without the usual bureaucratic hassle. In essence, they function as a logistics specialist for both their customers and their suppliers.
For a manufacturer, getting and maintaining control over working capital is a particularly critical issue. Ensuring that revenues come in on time, so that timely payments can be issued to suppliers, is critical. After all, a manufacturer can’t operate efficiently, or meet deadlines, if its supply chain is interrupted in any way. Where other businesses would be seriously inconvenienced, a cash flow interruption can completely halt production for a manufacturing business.
Martin Roscheisen has been a key figure in Silicon Valley’s tech startup scene since the 1990s. Since that time, he’s founded, co-founded, or been otherwise involved in the launch of numerous successful startups, most notably including FindLaw, eGroups, and Nanosolar. In 2015, Roscheisen took on his biggest challenge yet: breaking into the diamond industry.
While politicians might still be issuing opinions about the pros and cons of globalisation, businesses have long come to terms with the reality of competing in global markets. In order to sustain steady growth in the long term, businesses need access to international suppliers and markets.
It’s natural for businesses to prioritise their near-term bottom line above all else. Driving growth, managing cash flow interruptions, and investing in innovation for the future is expensive. Businesses who don’t control their costs, or misallocate funds, can quickly find themselves in financial difficulties. Cutting costs in the wrong places, however, can have similarly disastrous consequences, especially in the long term.
The European Commission has increased Ireland’s Rescue and Restructuring scheme from €20 million to €200 million. This ten-fold increase comes explicitly to offer rescue aid and temporary restructuring aid to Irish small businesses suffering from “acute liquidity needs” in the wake of Brexit. While this acts as a clear political signal from the EU that it intends to support Ireland, it’s still unclear how much effect a €200 million fund will actually have in the event of a no-deal scenario. Much more substantive support comes from the Bank of Ireland, which recently established a €2 billion Brexit fund for Irish businesses both north and south of the border.