8 Tactics for Better Cash Flow in Your Business
There are many different tactics that you can take to better manage cash flow in your business. It is important that you find the ones that work for you and your specific type of company. There are 8 strategies outlined below, but it’s important to note that not all will apply to every business model.
1) Keep your inventory low
Keeping your inventory at a minimum is the best way to ensure that you have enough cash in the bank. You can try to estimate how many sales you will have for the next few months, but it is important not to overstock.
Don’t forget about your debt either! If you are paying off a business loan or personal loan at any interest rate, aim to pay that down as quickly as possible so that when cash flow slows in the winter season, you won’t be dealing with high monthly payments during this time.
2) Make sure that you have a credit line available
If your business is new, it may be hard to get an established credit line. If this is the case for you, try getting a small loan from family or friends to use as collateral while building up your company’s assets and earnings over time so that when cash flow slows in the winter months you can cover payments yourself without having to pay too much interest on them. One option worth considering if you are trying to secure a personal/business loan with poor credit is Peerform where lenders compete for your custom offering low rates.
Getting paid back quicker allows businesses like yours more leeway with their budgeting and spending throughout the year. People who want quick service should always pay ahead of schedule (if possible).
3) Keep your administrative costs low
Administrative costs are the non-sales-related expenses that go into running a business. These include marketing, accounting, legal services, and any other type of overhead on top of salaries/wages for full-time staff members. Keeping these down is good advice in every season but it’s even more important during slow seasons when you can’t afford to have money tied up in different areas while not generating revenue from them regularly.
Cutting back on some services or trying out new strategies like cold emailing practices with Hubspot may be able to help cut down on the amount of money spent each month without making an impact on sales numbers at this point in time.
4) Ensure that your business is making a profit
Some businesses may be able to get away with having their full-time staff members not paid well, because those workers are happy just being around the company and feel like they can grow within it. For most companies, though this is simply not sustainable over any amount of time whatsoever and you should aim to pay people fairly for what they do so that when cash flow slows in the winter months, at least some staff won’t have to worry about where their next meal will come from or how they’ll afford health care expenses without insurance coverage.
This also means setting prices on services/products as high as possible while still allowing customers an opportunity to purchase them regularly throughout the year. Don’t price gouge but don’t sell yourself short either!
5) Automation
Using software like Hubspot to automate marketing and customer service tasks can really help save time while still ensuring that potential customers are getting taken care of/marketed to at all times. Leave yourself room for human error too; if you find yourself with some extra hours in the day during the winter months, work on improving your business processes even further by automating more things! This will give you more free time later when sales volume picks up again but it won’t be wasted because everything is streamlined now.
If your company can afford it, hiring an additional full-time staff member or two (or outsourcing) may also allow certain aspects of the business to become automated like order processing or other areas where employees currently spend their days working. There is a reason why this saying has endured the test of time: “time is money.”
6) Make the most of tax deductions
Tax deductions are a way for businesses to get back money that they would normally owe at tax time. These vary by business type and size but some examples include meals/entertainment, travel expenses (within reason), advertising costs, internet service fees, and more. It is important to keep careful records of these though so that you know how much in actual dollars your company will save when filing taxes with the IRS this coming April 15th or if required by your state on an even earlier date! Note: it’s helpful not only to track where business purchases come from but also what percentage of each purchase goes towards “tax-deductible” things such as advertisements versus personal items like lunch out with friends etc.
7) Develop a cash flow projection
Businesses should always have projections for the future in mind but when you’re just starting out, it’s easy to get caught up with generating sales that you lose sight of what could happen if things slow down. A good way to keep track of your business’ health is to develop a simple spreadsheet or handwritten ledger which outlines where the money comes into your company and how much goes towards each area (sales/marketing costs, overhead expenses, etc.). This will allow you to see at any given time whether there are funds left over after paying bills like salaries/rent etc., so that perhaps when an opportunity arises later on (a new client), additional employees can be hired without worrying about having enough capital available in savings.
8) Don’t be afraid to ask for help
It’s not the most pleasant thing in the world but sometimes asking your family members or close friends can save your business. If you find yourself strapped for cash and there is literally no way that sales will pick up soon, consider reaching out to them (or other interested parties) about investing money into the company so that it doesn’t go under. Be aware of what kind of return on their investment they might receive though; if this means taking a pay cut when things are at their worst then perhaps discussing with staff/family how everyone needs to tighten his/her belt until times get better would be an easier pill to swallow than giving someone else 100% control over where major financial decisions are implemented within your company.
There are many different tactics that you can take to better manage cash flow in your business. It is important that you find the ones that work for you and your specific type of company. There are 8 strategies outlined below, but it’s important to note that not all will apply to every business model.…