For most businesses, the difference between the money coming in and that going out is your profit. While these amounts balance out over the long-term, there are fluctuations during the short-term that can leave you strapped for operating cash at times. Operating according to your cash flow at the moment will inevitably lead to a short-fall that you may not be able to recover from. Careful planning and knowing your priorities can help you achieve a balance and improve cash flow during every stage of business.
Don’t plan your budget around the more plentiful times. Instead, look at what you have to work with when profits are at their lowest. Know what has to be paid on a monthly basis and determine what additions would put a strain on your cash flow during these times. Once you have the essentials worked out, you can look at the times where there is an excess and determine the best way to take advantage of it. Always put a portion into savings so that you have something to fall back on when things get tougher than expected.
Services that operate on a monthly fee instead of a full-price purchase or annual subscription are better choices, even if they may average out to be a little more expensive when broken down into monthly payments. This option makes it easier to plan in your budget and you don’t have to come up with large amounts of cash on the spot. Also, look at trial offers, starter plans, and low introductory rates on software programs that let you get familiar with a new program on the manufacturer’s dime.
Dive into marketing and start expanding your customer base. Don’t wait on new customers to come looking for you. Take advantage of social media to build brand recognition and start bringing in new customers to your website. Although you need new customers to help improve cash flow, building customer loyalty is also an important part of your overall income. Give customers special deals when they do repeat business with you and always strive to deliver superior customer service so they remember your company’s name for the right reasons.
Get rid of equipment and other assets that are no longer being used. There is a large market for quality used items that give other businesses the option to use better equipment without the price tag of new items. On the reverse side, if you are consistently adding new equipment to your operation, look for top quality used items that may be as much as 60% cheaper than they are new.
The cost of billing and collections can be a large portion of the expenses in some businesses. Instead of maintaining a staff that is dedicated to these services or taking time away from your employees’ time to do tasks that interfere with production, consider hiring a third-party billing company to do the job for you. It will save you time and money and increase the cash flow to your business. Professional billing companies are often more successful at collecting unpaid debts and they can give you more time to focus on your work.