As a small business owner, you understand just how many factors are at play in running a successful company. You routinely need to wear multiple hats and hopefully are constantly seeking strategies for making your operations more efficient and your team more productive.
With that said, few things are more vital to your business than properly maintain its finances. Remember: You can’t keep a company thriving without a healthy cash flow. So, that’s why we’ve listed these six simple, proven cash flow tips to keep your small business running smoothly:
1. Start a Corporation
One way to boost cash flow is by forming a corporation. For instance, a C corporation will provide comprehensive protection against personal liability and allow you to sell shares to an unlimited number of investors. Though it’s not technically a business structure, an S corporation is less expensive to establish and also provides liability protection. If you would like to get into charitable work, you might consider forming a nonprofit corporation. Whatever route you choose you can search the phrase “open corporation“ to connect with a formation service and quickly get your corporation set up.
2. Explore Revenue Streams
Increasing your income is always a reliable method of enhancing your cash flow. So, you should definitely take time to strategize with your team about potential revenue streams you could pursue.
Perhaps you could add a new product or service to your catalog. Or maybe you can upgrade an existing product or service by adding features or incentives such as: more extensive customer support, add-ons, better warranties, etc. Another popular revenue stream strategy you could implement is crafting a subscription service. Subscription services can be highly lucrative as they can generate regular income (usually monthly).
Finally, don’t be afraid to explore partnership opportunities with others in the industry or community. Partnerships are great as they allow you to generally put out a better product without having to do as much work.
3. Ramp Up the Marketing
Question-if a tree falls in the woods and no one is around to hear it does it make a sound? Now obviously, it would make a sound; however, what makes this philosophical question so profound is that it challenges our perceptions of reality. Many have argued that the fact ‘no one is around to hear it’ means that no sound can truly be recorded as the vibrations from the tree falling would go undetected. Wait! What the heck does this have to do with cash flow? Think about it like this; you can have the world’s greatest product or service but if no one is around to purchase it…
The more you sell, the healthier your cash flow will be. And to boost sales, you must improve your marketing strategy.
Revisit your visual identity to see if it needs an upgrade. Start with your logo, which should be modern, attractive, and relevant to your industry. You can easily design a logo that makes a strong first impression and distinguishes your brand from others by using a free online tool. That way, you don’t have to harm your budget by paying for professional design services. A logo maker tool will give you many premade templates to choose from. You simply customize the style and icon of your choice with your brand’s design elements and voila a new attention-grabbing logo.
Now that you have your logo; don’t forget to promote yourself by constantly advertising. Advertising, if done correctly, will help get customers to purchase from you. Remember: people can’t buy from you if they don’t know you exist.
4. Wait to Pay
Paying your bills might seem like a prudent strategy on the surface but it doesn’t leave any room for late-paying customers or other unexpected disturbances to your cash flow. Although we always advise that you should set up reminders or automatic payments for all your due dates. Or, at the very least, pay your bills a day or two early. When it comes to cash flow, paying your bills early can actually hinder your monthly cash flow.
So, if your financially responsible enough, you might consider waiting until the last possible day to pay any bills in an effort to keep as much cash reserves accessible as possible.
5. Incentivize Early Payment from Customers
Although, you may find paying your bills the day of highly valuable, you should always encourage your customers to pay their invoices early. Most customers don’t intentionally decide to miss payments or due dates. But the fact that they may forget doesn’t help with your company‘s cash flow.
Establish incentive programs (e.g., discounts, exclusive offers, rewards, etc.) for the people who pay before they’re required to.
6. Keep Your Books Tight
Lastly, accurate and consistent bookkeeping is crucial. None of the other strategies you implement for better cash flow will prove worthwhile unless you manage the money you have now. Look for affordable, effective accounting software to help your team keep tight reins on your finances.
If you want to keep your small business positioned to survive the economic times and flourish long-term then you must make monitoring your cash flow a top priority. Implementing the strategies above will go a long way in strengthening your company‘s financial management and growth potential. So, never stop learning how you can keep more cash available to your team at any given moment.
