The Lesson That Started in a Tile Shop
I have been involved in the business world since the late 1990s, which means I was vaguely aware that cashflow mattered long before I fully understood what that meant in practice.
The moment it stopped being abstract was in a tile shop in January 2000.
The Tile Shop
In 1998 I took a part-time role at a local tile shop. The motivation was practical - nursery fees for our youngest child, a reason to get out of the house, something to do that was mine. I had no particular ambition beyond that.
What I did not expect was to love it.
I learned an enormous amount about tiles, the industry, and how a small retail business actually operated from day to day. Before long I was managing the shop and coordinating the tile fitters' weekly schedules. It was genuinely satisfying work.
Then January 2000 arrived and everything changed.
It became clear that the business had a serious problem. More money was going out each month than was coming in. The savings that had been covering the gap were almost gone. Something had to give.
That something turned out to be my job.
I was made redundant. The business could no longer afford to keep me on.
I never forgot that experience. Not the shock of it, and not the speed with which a business that felt entirely solid could find itself in serious trouble. When I set up my first business, cashflow was at the front of my mind from day one. It should be at the front of yours too.
Why Cashflow Matters More Than Most New Sourcers Realise
The widely cited figure is that one in five new businesses fail within their first year. Cashflow problems are consistently identified as the leading driver of those failures.
A 2024 parliamentary report on small business strategy painted a stark picture of the pressures facing small businesses in the UK. The headline finding was that cashflow was identified as the primary challenge. Tens of billions of pounds are owed to small businesses in unpaid invoices at any given time.
Half of all invoices are paid late. Small businesses, the report noted, are effectively operating as involuntary lenders - extending credit they never agreed to, often to much larger companies that simply pay when it suits them.
You can read the full report here: UK Parliament Small Business Strategy Report
For a sourcing business, the cashflow challenge has a particular shape. Your income arrives in the form of completion fees, and the gap between starting work on a deal and receiving payment for it can stretch across many months.
You find the deal, secure it, present it to an investor, manage the process, and then wait for a conveyancing timeline that nobody can fully control. In the meantime, your costs continue regardless.
That gap is where cashflow problems live.
Five Things We Did to Protect Our Business
These are not theoretical suggestions. We used every one of them in our own sourcing business and they made a meaningful difference.
Charge a registration fee from the start.
We charged a non-refundable registration fee of £350 for every investor we took on. It is a modest amount that any serious investor will not hesitate over, and it creates an immediate pot of working capital. Register ten investors and you have £3,500 in the bank before a single deal has completed. That buffer matters enormously in the early months when completion fees are still weeks or months away.
Introduce yourself to the investor's conveyancer early.
As soon as an investor has a solicitor in place, ask the investor to introduce you to their legal representative and confirm that a sourcing fee will be payable upon completion. Do not leave this until the deal is progressing. Get it established early so there are no surprises later.
Send your invoice directly to the conveyancer for disbursement.
Rather than invoicing the investor and waiting for them to pay you after completion, send your fee invoice to the conveyancer to be settled during the disbursement phase of the transaction. This means your fee comes out of the completion funds automatically, rather than sitting as an outstanding debt with an investor who has just spent a significant sum and may not be in a hurry to settle yours.
Keep your year one and two costs ruthlessly low.
Only buy what is essential. Use free or low cost systems wherever possible. Every pound you do not spend in the early months is a pound that does not need to come in before you break even. The lower your fixed costs, the more resilient your business is to a slow month.
Know your numbers at all times.
Always know what your monthly fixed outgoings are. Always know your current bank balance. Always know the minimum you need to earn each month just to cover your costs. This sounds obvious but the number of business owners who do not have a clear picture of these three figures is surprisingly high. You cannot manage cashflow you cannot see.
Property Sourcing Cashflow: The Reality of Year One
Income in a sourcing business is not linear. There will be months where everything completes at once and the bank account looks healthy. There will be months where nothing comes in at all.
That is simply how the business model works, and the sooner you accept it the better positioned you are to plan for it. The great months are not a signal to relax. They are an opportunity to build the reserve that will carry you through the quiet ones.
The tile shop taught me that a business can look entirely solid from the outside while quietly running out of runway underneath. The numbers always tell the truth eventually.
Know yours. Manage them actively. And build the habits in year one that will protect you for every year that follows.
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Staying on top of your numbers does not have to be complicated, but it does have to be consistent.
NAPSA members get access to our cashflow spreadsheet, designed specifically for sourcing businesses, to make it straightforward to track income, outgoings, and your monthly break even figure from day one.
If you want the tools, the support, and a community of sourcing professionals around you from the start, find out more about NAPSA membership here.
