Improving small business with higher cash flow
Improving a small business with higher cash flow is one essential key in building a better business. The cash flow is the amount of money that is coming into the business, not the amount that is being spent. There are many ways to improve your overall cash flow and in turn improve your business. Here are a few steps in getting your small business on track to increase its cash flow:
Stick to a budget:
It's critical to map out your business expenses in as much detail as possible. Know what you are paying for: insurance, utilities, lease payments, rent, payroll, and inventory. Prioritize these things and make sure that you have sufficient funds. It is important to make and stick with a budget. Know how much money you have to spend on the businesses' advertising, marketing, products, projects and so on. If you stay within your budget then you will not be overspending money that you don't have. Overspending a couple hundred dollars on a particular project may not seem like a big deal, but it will quickly add up if there are multiple projects going on at a time.
Stick to payment terms:
Encourage prompt bill payment with your customers. Create incentives such as: discounts and special offers if bills are paid before the due date. Others suggest speeding up the ordering, shipping, and billing process. You can have customers fax, call, or create their orders online. Try to ship out the product and bill the client the next day, and deposit checks as soon as they arrive. You can also charge late fees to those clients that do not pay on time.
Once certain assets have been used to the extent that they are no longer useful to you, consider selling them and see if you can get good value for it. You in turn will get extra cash that you can use to replace old equipment or materials and even upgrade to a new model. You may even reduce your debt in the process of selling and buying. A lot of times assets will last a very long time so consider selling them to smaller businesses that are looking to improve their company by adding different equipment.
Check customer credit:
Making sure a client has great credit or money in their bank account before you take their method of payment will ensure that their payment is valid. Taking care of the problem right then is a lot easier then waiting until you realize the check has bounced and the customer is gone. This will help reduce the headaches associated with money problems.
Have a referral system:
Word of mouth is the most powerful and cheapest way for a business to get new clients. People prefer to do business with those they like and trust. Have a referral system in place with your existing customers, business partners and even your employees to help them refer you new business. New business will bring higher cash flow for your small business. The more business you get, the bigger you will become.
Create a rewards program:
A rewards program offers discounts to its customers in the form of a credit towards a future purchase, or special product incentives, or in some cases even cash-back. The cost of this program will be minimal to your company and it will result in, more purchases more often, and customer loyalty. You can also make rewards program part of your referral system.
Understanding your cash flow is one of the most important keys to the success of your business. There are a number of techniques that can improve your small business. Increasing your cash flow is one of them. Implementing a few of these steps will ensure that your cash flow increases and you improve the overall success of your small business.