If you’re feeling like your business is drowning, it’s time to step back and make some changes.
Starting your small business was undoubtedly an exciting endeavor, but when reality sets in it could become overwhelming. Managing your practice, product or service is probably what you’ve dreamed about and what got you into business. But maintaining positive cash flow and keeping your business above water could be a new world for you. Small business owners have to face the reality of business records, following up on receivables, and dealing with inventory. Here’s some sound advice when trying to get a hold of your small business cash flow.
Create a discount program for early payment options.
By creating a 2-5% discount when paid in 10 days, your customers save money by paying you on time, or early! This can help you maintain the positive cash flow with your receivables. However, the bigger the customer the less concerned they are with savings and a bill may sit before getting attention. In those cases, you may want to consider setting up your payment schedule to ensure your costs are covered up to whatever point in the project you are up to, or even a bit ahead of time to make sure your expenses are covered.
Consider hiring professionals to collect on delinquent accounts.
If you are holding a large account receivable balance, chances are your employees don’t have the extra time to help you call for collections. It takes a lot of time and skill to pursue accounts later than 90 days. To avoid wasting time that can be spent on pursuing new business opportunities, think about hiring a collection agency to help close the gap on your delinquent accounts. In some circumstances, these agencies may even make an offer to buy out your bad debt, at a discount of course, with the hopes that they will be able to recover a larger portion in the long run. It all depends on how much need your business holds in receivables. In either case, even if you are unable to hire a collections agency, make sure those calls get made so your receivables don’t disappear!
Purchase used equipment and furniture for your office.
Whether your business has adopted an eclectic style or you prefer to maintain a traditional professional atmosphere, you can find just about anything for sale online in places like Facebook Marketplace, Craigslist, Ebay and Letgo. Millions of ads and local postings can help you to furnish your business and find the equipment you need. From copy machines to cars, consider purchasing used items to decrease your business expenses. You can save hundreds by buying a used business vehicle as opposed to leasing a brand new one. Same goes for special events. If you find yourself frequently renting large items like a popcorn machine or a tent, consider purchasing one of your own – and consider buying second hand to save money for your business in the long run.
Maintain your cars and equipment.
There’s nothing like blowing an engine just because you ignored your oil change schedule. Whether your cars and equipment were purchased new or used, make it a top priority to maintain and take care of what you have so you minimize the need for repairs or replacements. Structure it right into your workflow and add it to your calendar to regularly get your cars serviced and your machines maintained, your bottom line with thank you!
Hold special promotions when cash flow is slow.
Well staged sales where you offer steep discounts for large jobs by signing up NOW can definitely boost your productivity during down times. Make your customers and clients feel special by emailing or calling them individually to let them know. Perhaps even coin it a VIP Discount Event. Timing and promotions can definitely make a positive impact to increasing your business during slow periods instead of just sitting in the office waiting for customers to come through the door.
Another way to be proactive is to get outside and meet your target market where they are.
If you have high end clients who golf on a Friday afternoon it might behoove you to do the same. Establishing relationships with your community will help keep you and your business top of mind when someone needs what you have to offer. If Mom’s are your target market try attending a painting class and make some new friends. It can be as easy as getting to know the other parents at your children’s sports activities. Build strong relationships, keep true to your word and you’ll see how the business will come around. This tactic is more of a long term way to build your book of business and keep your cash flowing but probably one of the most important activities you’ll want to prioritize in your business schedule.
As you can see there are countless ways to increase your small business cash flow. Most importantly, stay on top of your accounts, and make sure you know where your business stands financially. Not good at maintaining the books? Hire a bookkeeper and let the stress melt away as you get weekly updates. Take a step further and hire a CPA. Also, make sure there’s more than one person who knows the ledger and can manage in your absence if needed. Take control of your business and feel the cash start flowing in the right direction.