Every business runs into cash flow problems from time to time. Whether your company is a small startup or a large nation-wide operation entering its second decade, keeping the money flowing through every department of your business is key to your success. So if you’re hitting some financial speed bumps, here are some ideas to help you smooth things out.
Cut Spending and Hold Onto Some Cash
When looking for ways to increase cash flow, it’s often easiest to begin with cutting back on spending. If you are a new small business owner just starting out, you may have a lot of room for improvement here, as many new entrepreneurs overspend when first starting out.
Start with frivolous expenses.
Do you really need four cases of multi-colored sticky notes?
How about all those seminars, trade journals and magazine subscriptions?
Are quarterly in-person meetings and cross-country flights always necessary, or can video conferences get the job done?
For larger and more established companies, larger cuts might be needed. Just be sure that you don’t diminish the quality of your products and services – including customer service.
For expanding companies, consider leasing new properties to free up cash rather than getting locked into long-term real estate deals.
Improve Your Pricing and Sales Process
While tightening up your budget can help you improve your cash flow, the other side of the coin is to increase your income. There are almost endless ways to do this, but there are some common strategies that work for almost every business in every industry.
Should You Increase Your Prices?
The trick is to focus on the value you provide to your customer. And value includes more than just the product itself. If you can provide a friendlier, faster, more enjoyable buying experience compared to your competitors, then you can expect to increase prices without losing customers.
Making more sales is another way to boost cash flow.
Does your company offer a wide enough variety of goods and services?
Are there any other products and services you can offer as upsells that would complement your current best sellers? Are your sales staff receiving regular training and reviews to help them use upselling techniques more effectively?
Finance Your Cash Flow
Cutting costs and boosting sales are the primary ways to improve your cash flow. But sometimes you need even more than those basic methods can do for you.
If you have already trimmed the fat in your budget and sales are coming in on target, the bottleneck may simply be the time it takes from making the sale to the funds hitting your account. In that case, financing options like invoice factoring might be the solution.
To explore factoring and other financing options that can increase your company’s cash flow, contact First Source Capital today.