Running a small business
can often mean tight margins and watching each dollar that comes in. Sometimes,
it's hard to manage cash flow if you're trying to buy in bulk to reduce the
costs of each individual item or if you need to invest in equipment or upgrades.
We've collected five great, easy-to-implement ways for small businesses to
improve cash flow.
Reevaluate Your Pricing Structure
If you've been in
business for a while, you may not have completed a price comparison recently.
You may be able to charge a bit more for your goods or services now than when
you were first starting because you've built up a history of solid performance.
For example, if you offer
professional services, like accounting or legal services, you may be able to
charge a new client a bit more per hour than you're charging current clients.
If you sell tangible goods, then you may be able to sustain a 10% bump in
prices without driving away customers.
Completing a comparison
shop-around ensures that you're placing yourself correctly in your market. Not
every consumer shops solely based on price, and if you've established yourself
as an authentic, trustworthy brand, then you can keep your customers, even if
they're paying more.
Offering online payment
services for clients can make it easier for them to pay you right away. Make
sure that you're invoicing promptly and consider emailing invoices versus
waiting for mail delivery. If you offer a link to an online payment portal in
the email, then your clients can pay right away. You may also wish to offer an
incentive for paying early or assess penalties for late payments.
If you don't invoice
clients and they instead pay for their purchases immediately, consider offering
online sales in addition to your brick-and-mortar store sales. You can also, if
you haven't already, expand your payment options, such as offering Apple Pay
and Google Wallet services. Don't miss a sale because you can't take your
Update Your Equipment
investing in equipment,
from point-of-sale machines to specialty production equipment like a baker's
oven or sewing machine, can be one of the largest start-up costs for a small
business. You may find that older, less efficient machines are slowing down
your ability to create goods for sale or that older software isn't as efficient
in keeping up with client needs, online sales, or daily business operations.
If you haven’t already,
consider leasing your equipment instead of buying new or secondhand. Most lease
agreements come with a maintenance package, which can end up saving you money
on repairs and preventive maintenance.
Plus, when you lease
equipment, you can typically upgrade every few years, ensuring that your
business has the leading-edge technology and machinery it needs to run
efficiently and improve your products and service. Everything from cash
registers to phone systems can be leased, possibly saving you a bundle in the
Renegotiate Your Supplier Contracts
You may be in a better
position now that you're established to negotiate better pricing from your
suppliers. If you have a steady history of on-time payments and you've been
consistent with orders, then asking for a better deal can help reduce your
overhead and improve cash flow. Or maybe there's a new supplier in town that
can offer you a more attractive package.
Make sure if and when you
do change suppliers that you're getting a dependable replacement. You may wish
to start small, ordering 15% or so of your items from the new vendor, until
they've demonstrated quality and consistency.
Focus Your Marketing
Improving your cash flow
isn't just about cutting expenses. You can also bring more customers in or
increase sales to your current customers with a better marketing strategy. For
example, your website should work for you as a sales tool, not just to provide
information. You may choose to have an online store or offer other resources
for your customers.
Many people respond to
brands and businesses that are authentic and engaging. For instance, a website
that offers useful content creates a greater level of trust with your
customers. If you have a bakery, for example, you may wish to post short videos
with at-home baking tips for your customers. Or a clothing boutique can provide
sneak peeks of new arrivals and blog posts about the latest fashion trends.
taking a look at how much you're spending can help improve your cash flow. And
if you aren't actively growing your business, you may be missing out on new
customers. By incorporating tighter spending and growing your business through
better marketing, you can easily begin to see results.