8 Techniques to Improve Your Small Business’s Cash Flow - Written by: Ed Carter of ablefutures.org
Your business is doing well, but it always seems like your cash flow is skimpier than you would like. Sometimes, you find yourself worrying about your company’s budget despite your strong sales. For small business owners, mastering a few strategies to boost cash flow is the key to company longevity and success.
By enhancing your company’s digital marketing strategy with guidance from Take It to the Edge Marketing, you can secure new clients and increase your overall revenue. And with these techniques for boosting your cash flow, you’ll be able to move your business forward.
Establish an LLC
By structuring your business as an LLC, you’ll be able to boost your cash flow in the long run. This is because filing for LLC status makes you eligible for special tax breaks. Furthermore, this is also a smart strategy for protecting your finances: with this business structure, you’ll qualify for limited liability, which means that your personal assets are safe.
However, it’s important to recognize that each state has its own set of regulations for establishing an LLC. Therefore, make sure to read up on the rules in your state before you begin the filing process so that you can ensure that you meet all of the requirements. Working with an online formation service can help you with the entire process.
Reduce Your Expenses to Improve Cash Flow
What’s the easiest way to improve your cash flow in a short period of time? Take a look at your budget and determine where you could quickly cut down on certain expenses while still providing the same quality of service to your customers. For instance, you may notice that you rarely use certain office supplies, so you no longer need to order them. Additionally, you may have subscriptions to a particular software as a service that you rarely use and could easily do without.
It never hurts to look into more substantial changes as well, such as moving to a new location where you could secure a cheaper rental rate for office space. Before you officially go through with any changes, let your employees know about the new direction you’re taking ahead of time so that they aren’t caught off guard.
Consider Working with Contractors
Maybe you’re thinking about redesigning your company’s website, improving your search engine optimization strategy, or increasing your focus on social media marketing. You might assume that you need to hire a full-time employee to work on these projects, but instead, you could consider hiring contractors to save money.
Hays states that when you hire contractors, you’re able to save money that you would need to spend on training and employee benefits. Contractors also bring their own specialized knowledge to the table. You’ll be able to keep costs down while launching new projects.
Invest in IT Security
As a small business owner, you may believe that IT security is something only larger companies need to invest in. However, many cyber criminals choose to target smaller businesses because of their lack of cybersecurity protection. As such, it’s very important to protect your business and your clients from potential threats.
Cyber security data protection can help shield you against dangers such as ransomware and hackers, as well as provide a recovery plan in the event that you are the victim of a crime. IT security specialists can also ensure that your data is properly backed up to help reduce the amount of damage caused by cyber attacks.
Streamline Inventory Management
If your inventory is disorganized, you can easily lose track of valuable supplies. This is a major concern for brick-and-mortar retailers and those who run ecommerce businesses. By improving your inventory management system, you can ensure that you do not lose money on misplaced or broken inventory. You will also be able to ship out orders faster and maintain a higher accuracy rate, which increases your customers’ satisfaction. If you have a storeroom or warehouse, reorganizing it could be a worthwhile project.
Furthermore, you may be able to save money by renegotiating your contracts with key suppliers. If you intend to negotiate, Supply Chain Dive recommends working towards an agreement that clearly benefits both parties and reevaluating your contracts from time to time to ensure that your terms are still ideal for you and your supplier.
Choose Smart Investments
Naturally, you don’t just want to boost your cash flow by cutting costs - you also want to drive new revenue. Therefore, you’ll need to invest your current profits wisely so that you can get a great return on your investments.
One of the simplest ways to find new clients is by revamping your digital marketing strategy. Once you’ve implemented an effective strategy, you’ll be able to draw in new leads consistently and exponentially grow your reach and influence in your industry. This is a good time to assess your SEO efforts and other digital marketing initiatives.
Rather than trying to make strategic changes on your own, you can work with a digital marketing agency like Take It to the Edge Marketing. Using some of your marketing budget to work with an agency can help you get better results on a shorter timeline - you will definitely be able to benefit from their expertise.
Incentivize Early Payments
Perhaps your cash flow is suffering because your customers often pay you later than you would like. Maybe you offered long pay periods early on, but now, you’re wondering if you should offer a shorter pay period so that you can receive payments earlier. While this can be a smart choice for your business, you can also take additional steps to incentivize early payments. For instance, you can give discounts to customers who pay early.
Additionally, using invoicing software can help you speed up this entire process. You’ll be able to keep track of which customers still owe you payments so that you can politely follow up with them.
Utilize Bookkeeping Software
Finally, if you haven’t already set up bookkeeping software for your business, now is the time to do so. With bookkeeping software, you’ll be able to get a big picture view of your company’s finances at any time. This will allow you to identify areas for improvement in your budget, invoicing process, and even the way you order and manage your inventory. Plus, it will be much easier to work with your accountant and file your taxes during tax season! As your small business grows, bookkeeping software will be indispensable.
Even if your sales are increasing, your business could still be in a precarious position if you do not have a healthy cash flow. Many small business owners struggle to improve their cash flow in the early months of running their companies. But with these tips, you’ll notice that you have more cash on hand for your business!
Photo via Pexels
Leave a Reply.