3 Easy And Unexpected Ways To Improve Small Business Cash Flow
Summary: Cash flow is your lifeblood as a business owner. You know that improving cash flow could make a huge impact in your life, but it's hard to find the right information and even harder to implement what you learn.
There are so many things that can be done to improve cash flow in your business, but they're overwhelming and difficult. Most of us don't have time for complicated solutions or training videos that take hours out of our day.
Here are 3 Easy & Unexpected Ways To Improve Small Business Cash Flow -- Listen in to learn how easy it can be to increase profits so you have more time for what's important in your life because of an improved cash flow in your business. This means less stress about money and more time for family, friends, hobbies or whatever else matters most to you.
Do the words ‘cash flow’ send shivers down your spine?
If it does, just know you aren’t alone. It seems to be a “taboo” subject for many businesses and for a good reason. In fact, 8 out of 10 business failures can be attributed to cash flow.
However, as much of an uncomfortable situation, conversations on cash flow need to happen. They’re crucial in ensuring that you’ll be able to create a strong, profitable, and financially stable company. Everything will start to change when you create that type of security for your business. You’ll find that you’ll experience less stress, have more time, and have access to more opportunities than you can suddenly take advantage of to further your business. You’ll have more confidence in your decision-making process when you feel safe enough to handle taking new risks.
What Do Cash Flow Problems Look Like?
Here is a quick list of what cash flow problems can look like in your business:
There’s really no other way to put it. Cash flow makes you feel good, confident, and like the moves you’ve been making have been right.
And, to help as many people as possible experience this feel-good sensation, we’ve come up with three easy (and likely unexpected) tips to improve your small business cash flow.
Check them out:
The 3 Big Ways To Get Cash Flow Going
Regardless of your journey, some steps will take longer than others. Sometimes, you can't change the duration of time it takes to complete a certain step, so you just have to smile and enjoy the ride. Other times, the steps can be adapted to ensure optimal efficiency. Here’s what I mean:
1. Reduce the Hurdles.
A hurdle is an obstacle or challenge that an entrepreneur faces that discourages cash flow. This means that the business owner can make it challenging or slow for a client to say yes.
For example, let’s say you meet with a client and they are excited to work with you, but it takes weeks to give a presentation. That potential client has now moved on to somebody else because they haven’t heard from you. They left the initial meeting ready to say yes, but they were forced to find another, quicker solution because your process delayed things.
The truth is, that was a missed opportunity.
Typically, hurdles are built into a business because of the owner’s fear or experience. It’s essential to change the narrative around asking for money and remembering that cash flow can serve people. It's what keeps the doors open, the lights on, and you continue doing the excellent work. Without cash flow, you can not impact the people looking for what you have to offer.
2. Leveraging and Maximizing Your Investments.
I look at business as a return on investment.
I’m investing my time and money so that, in return, I earn revenue.
It’s important to track everything in your business because this is how you build leverage, create scalability, and start maximizing your return on investment.
Money Stewardship In Business
The term “Money Stewardship” simply refers to the way you’re taking care of your business’ money investments. You need to start looking at these moving parts in your business:
Ask yourself: “How can you compare these elements to how you can better use them to increase your capacity?” Usually, when you increase your capacity, it will, in turn, increase your revenue.
When making new investments, you need to ensure that you're getting as much from that investment as possible. In terms of people on your team– you’ll never get 100% capacity out of your team because there are vacations, holidays, sick days, etc. We're not looking for perfection, but we are looking for good enough, which typically happens around 80% effort.
When we come in to do a business audit (a service where we evaluate business performance and financials to find cash and growth opportunities), I have noticed that I see business operating at 50% in capacity, leverage, and scalability. Intend to get between 50% and 80% - that’s a 30% increase that is money in the bank.
This profit is now coming straight to you because you do not have to spend more to generate more revenue.
Some Questions To Ask Yourself:
- 1Do you need to start thinking about how you are leveraging your investments?
- 2What methods do you use to maximize your investments so that the money you've already spent is well protected?
- 3Is your business producing the maximum return that it can?
3. Money Out
This is where business owners can nickel and dime themselves to death.
Therefore, it is crucial to look at your expenses and determine what you’re spending money on versus what you’re utilizing. Be cautious, though; the goal isn’t to cut costs so much that it hurts your business but to identify where you’re incurring expenses that are no longer valuable to the business.
Be sure to pay attention to the expenses that are subscription-based or recurring, such as those that automatically draft from your account every month. These are common mistakes that are easily overlooked.
If you’re a small business looking to improve your small business cash flow, these are the most straightforward steps you can take TODAY that will help change your business. When you are able to have open discussions, review the money in your business, and put the advice to work - you’ll be able to grow the profitable and sustainable business that you’ve been striving for all these years.
Are you having trouble getting an unbiased perspective on your business model and identifying holes in your cash flow strategy?
Your Biz Rules Community is here to help.
The YBR Community is a place where women entrepreneurs work to achieve great things in their business by collaborating with and uplifting one another. Here, you’ll gain access to meaningful feedback and outside perspectives on problems you have and have yet to face on your business journey.This type of community and support are the keys to becoming the business owner you’re meant to be.
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