Guest Submission by: Virginia Cooper No matter what kind of business you own, you won’t go far without cash flow. Cash flow problems could spell the end of your venture, and this is a struggle for many companies. If you find yourself lacking the money you need to pay your stakeholders or operate effectively, you’re not alone. But you must address the issue now so that you can position your business for long-term success. Here is some practical advice for recognizing cash flow problems and fixing them.
Know What Problems to Look For
Niche and seasonal businesses often experience issues with cash flow, but they’re not the only ones. Any type of business, no matter the size or industry, can quickly find itself in trouble. It can be a straightforward issue, such as having too many expenses, charging too little for products/services, or not having enough clients or customers. Or it can be something unexpected, like minimum wage adjustments, clients who pay late, or miscalculated taxes. The first step of managing your cash flow is to always be conscious of potential problems.
Work with an Accountant and Helpful Software
Managing money is not easy, especially when you’re juggling all of the other responsibilities that come with running a business. That’s why it can prove worth the investment to hire an accountant. A qualified accountant can evaluate where your business stands financially, guide you through challenges, and put you on the track to growth and wealth. Your accountant can also take care of taxes and help you stay on top meeting filing deadlines.
When it comes to having business documents at your fingertips, tap into financial reporting tools that keep all of your financial information in one place for real-time cash flow updates. Software like QuickBooks is a great choice here, and your accountant will likely use it or recommend that you begin using this platform. Functions like being able to add charts and exporting to your financial reports with a click of a button can save you time, money and headaches. You can even tap into templates to draft important documents when you need them as soon as possible.
Getting paid on time is crucial to maintaining and predicting cash flow. Bill clients immediately, create simple and easy-to-understand invoices, and make payment terms clear at the beginning. You can use an invoice template to create branded invoices and then add your own business information, logo, and colors.
Boost Sales via Marketing
Making your business more money will help with cash flow. It sounds simple enough, right? But a lot of businesses get so focused on how they can get themselves out of a hole that they feel like they can’t put the effort into increasing sales. Just remember that boosting your company‘s overall sales through strong marketing efforts can fill the gap left by minor profit losses and quickly get your business on solid ground again.
Consider any discounts or promotions that you can offer customers. While it costs money upfront, promotions can add significant sales in the long run. If necessary, change up your marketing strategy. Just be careful of how much you spend on marketing because you don’t want it to take too much away from the money you can put toward cash flow.
One easy and affordable strategy is to use an email marketing campaign. You’ll have more control over who receives your materials, allowing you to tailor your approach to your clients. Last but certainly not least, put together a website that showcases your services in a smart, engaging way. You can also set up a newsletter that visitors can sign up when they visit the site.
Evaluate Your Inventory
The inventory you hold can also have a lot to do with how healthy your cash flow is. If items are not selling well, don’t keep them in your store. This pertains to seasonal products, obsolete inventory, and even items that are sentimental to you but aren’t selling quickly.
Remove your excess inventory to make room for newer items that you know can sell quickly, and you’ll see a big difference in your cash flow. Selling inventory at discounted rates is a great way to put money back into your business. You might also consider storing away certain items to sell at a later time.
If your business is experiencing cash flow problems, now is the time to address them. Learn how to recognize potential issues, and think about hiring a financial consultant to help you manage your money. Lastly, find ways that you can increase sales and improve your inventory. Maintaining healthy cash flow will go a long way in helping your small business thrive for years to come.
Image via Pexels