How Can I Improve My Cash Flow?
It’s the number-one question on the minds of small business owners: how can I improve my cash flow, and how can I do it quickly?
There’s no two ways around it, your cash flow is imperative to the success of your business. Understood more broadly, it’s the money coming in and out of your business – if it’s positive, you’re in good shape, if it’s negative, not so much.
From this article, you’ll learn:
- The importance of cash flow
- What you can do to improve it
- How to make improvements before they become problems
Are You Lacking In Cash Flow?
Many businesses fall short when it comes to their cash flow. This is due to some fairly common problems:
- They aren’t keeping track of it
- There are failures to grow the business
- The product doesn’t line up with demand
While these aren’t all the issues that can stem from cash flow, it is important to know that they are some of the biggest. Let’s begin with tracking…
You need to be able to keep a close eye on your cash flow. That includes not only understand the day-to-day implications but projecting into the future to assess the status of your cash flow moving forward.
Plenty of businesses go through slow periods, and many fail when they lose sight of that. If your cash flow dries up during the winter months, you may go out of business simply because you never saw it coming.
If you care about improving your cash flow, you need to plan ahead, make proactive changes to your business, and keep a close eye on your financials. Then, and only then, will you be able to manage your cash flow swiftly and effectively.
How To Improve Your Cash Flow
So, we know how important cash flow is to our business, but how do we improve it?
The following are some strategies you can use:
- Discounting – These are great to get consumers in the door, but they need to be done strategically. Offering your clients a week of free service, or a lower entry rate, is a great idea – but it needs to be couched in your customers coming back for more.
- Pricing – In the same vein as discounting, pricing should be built on how much you should charge, how much something costs to make/provide, and the margins. If you are discounting, it should be based in stil turning a profit (and not a loss).
- Bundling – Tying together products and services is a great idea, especially if you feel like discounting is too risky. You can add value by putting products together, or adding additional services, to boost your cash flow along with your initial price point.
- Deposits – Every business should have a formed deposit strategy. This is a great way to get money up front, even during slow periods, to provide products or services at a later date. It helps keep your business afloat, while still providing value to clients.
- Loyalty – Repeat clients are essential to your business, and helps your cash flow quickly if they keep coming back for more. If you offer loyalty programs, VIP offers, and frequent-shopper points, you can gain more customers who will feel loyal to your business and your brand.
If we take all of this together, one of the main things you can do to improve your cash flow is to work within your existing customer base. If they enjoy their service, they will tell more people about you, so nurturing your existing client base is a great place to start.
After all, these are the same people who already find value in what you do. If you want to increase your cash flow in a hurry, it is more difficult to spend money marketing to new clients than it is to retain your existing client base.
If you think of ways to change the way your clients engage with your product, you can have them sign up for new services, additional packages, or purchase your product on a longer timeline to help suit your business.
Overall, you should think about ways that you can “surprise and delight” your clientele. As mentioned, this can be through discounting, referral programs, VIP offers, and more. All ways to get more cash flow out of those who are already working with you – and turning them into brand advocates.
If time is of the essence, you need to work with what you have: your current customers.
Identifying Cash Flow Issues Early
Our team built Board to do one thing: to help empower small business owners to take control of their finances, make smart decisions, and become more profitable.
Part of that is taking the data from your business and making those informed decisions. We introduced a platform that tracks your business’ performance, and forecasts for the future. This way, you have a handle on your cash flow before any issues occur.
If you have access to accurate cash flow forecasts, you can:
- Plan offers to mitigate slow periods
- Invest free cash in your offerings
- Understand when your customers find value in your business
If you want to succeed, grow, and help your clients, you need to have a nuanced view of your finances. That includes taking the data, applying it rationally, and making decisions based on what works for you and your audience.
Together, Board can do that with your business.
Interested In Getting Started?
If the cash flow of your business is important to you, then Board is a great place to start. With it, you can sync your business bank accounts, keep track of your finances, and strategize ways to increase your cash flow in a hurry.