3 Simple Ways to Increase Cash Flow
We NEED more money. Cash flow problems are a common and dangerous threat to the survival of their companies. In fact, a study by U.S. Bank reveals that small businesses and startups fail 82% of the time due to a low cash flow.
”Is your business in danger of this? A business is considered to have cash flow problems if they are spending more money than they are making in a given period of time. Many challenges can contribute to this, but there are a few that many businesses have in common.
Challenges causing cash flow problems
Too much spending
We often hear, we need to spend money in order to make money and while there is some truth to that, what we spend it on makes all the difference. If you are spending money on investments that will clearly add to your profits, then yes, that makes sense. But many of your expenses will not have an ROI.
Solution: Take a monthly intake on your expenses vs income and assess which expenses will grow your business and which will not.Important Items to Consider: Be honest with yourself. If you don’t think you can afford a networking group for $150/month (with the benefit of getting new clients), but pay $90/hour ($320/month) for private training at the gym, look closely at other priorities that may not be beneficial. It makes sense to invest in self care, but an inexpensive gym membership may make even more sense.
No Monthly Spending Budget
Are you monitoring your cash flow? Or are you simply paying attention to bills as they come in? If not, now is the time. Monitoring your expenses is critical to becoming financially successful. Many people don’t bother to do this because it feels overwhelming and tedious. But ignorance is not bliss. Without this knowledge it is impossible to maintain confidence in the business.
Solution: Create a process in your weekly/monthly routine to account for your spending and declare which can grow your business and which can drain your business.Important items to consider: Look closely at extra expenses that originally seemed small, like app subscriptions you may no longer use. Also look at items that once seemed critical to your business but may not be anymore, like the merchant service provider you currently use. Are you still paying extensive fees every time a customer uses a credit card? With simple shifts in commerce you can now accept credit card payment with NO fee at all (www.PayCardTech.com) and save thousands of dollars a month.
Overestimating Future Growth
It’s great to be optimistic about possible growth, however, it is also important to account for a reasonable time frame without expectation that there will be a sudden growth spurt.
Solution: Try to find data that supports large growth for your current system and then proceed with caution. However, if you can’t find data to support your intuition, keep a slow and steady pace and keep the spending within the limits of your profits.Important items to consider:If creating realistic expectations is not a strength of yours, it may be more profitable to hire someone that can help outline timely goals so you can grow at a manageable pace without unnecessary losses (www.GellerCoaching.com). Increasing cash flow can be done easily with a few small changes and will not always be dependent upon new business. Having said that, when the new business does come in, the cash flow will be even greater!
Be efficient, effective and productive. All the rest will follow.