The future of your small business greatly depends on its ability to stay solvent. Here, we're not just talking about its ability to cover major expenses like the rent, the utilities, and the cost of supplies. We're also talking about unforeseen events like making a construction repair, replacing malfunctioning equipment, or refunding a product to a dissatisfied customer.
Then, there are settlements, bonuses, and so many other factors which make it nearly impossible for your business to stay on top.
Here are nine awesome ways to manage cash flow for your small business:
- Track your spending with software
- Create a subscription-based payment system
- Sell your invoices
- Use personal funds to get things going
- Call your debtors
- Be more frugal
- Always have a reserve
- Pick a better merchant services provider
- Create a long-term financial plan
Ultimately, the most important asset for your small business is your own business know-how. Read each step carefully to get the full extent of learning to grow your small business.
Track your spending with software
Tracking your expenses manually is far from difficult, yet, it’s much more efficient to do so via an app or a platform.
If this is an online or, better yet, a cloud-based service, you get the privilege of sharing it with whomever you authorize in the office.
Some of these tools offer free service of a financial projection, which, on its own, makes a compelling case when it comes to using these devices.
Create a subscription-based payment system
One of the problems with income, early on, is the fact that it can be quite unreliable.
Some of your clients pay at the beginning of the month; others do so later on, while there are some who forget to do so altogether, even though they do not intend to give up on you.
To avoid this, try creating a subscription-based payment system to use for your business. In this way, you can both automate your income and make it more reliable.
Sell your invoices
Sometimes, you’ll have the money on paper, yet not have the cash you can spend on day-to-day operations. Once this happens, you can look towards your accounts receivable and consider selling at least some of them.
In this way, you’re agreeing to sell your invoices
at a 1.5 to 5 percent lower price than what they’re worth, but you will receive most of the money right away (sometimes even in the first 24 hours) and the rest when the invoice finally arrives.
This is a great choice for those looking for a quick and reliable way to make it during those first several months.
Use personal funds to get things going
When money is tight, people tend to do reckless things. For instance, you might feel tempted to team up with someone and sell some equity in your company.
Sure, this resolves some of your money issues, yet, it also means you’ll have less control over the company in the long run. To avoid this, you can always use personal funds to support your business. Sometimes it might even be worth your while to apply for fast loans
Of course, should things go south, you’ll risk your personal assets; nonetheless, this is a risk you sometimes have to take.
Call your debtors
Another thing holding some of these small businesses back is the fact that they’re just too polite to ask for their money. Either that or like many small business owners, they are simply too forgiving for their own good.
Some clients just can’t pay, yet some fail to meet their financial obligations due to negligence or sheer lack of consideration for you as a company.
In a case when you’re personally too timid to ask for your money or you feel like getting into a conflict with your clients (no matter the cause) is a bad business practice, you can always outsource this task to a professional debt collecting agency
Be more frugal
This particular piece of advice may seem too straightforward, but there’s nothing more important than finding new ways to reduce your overhead.
Renegotiating your bills is a great idea that can be achieved in so many ways. You can switch to more planet-friendly office appliances, green-up your commute, save on supplies by going paperless, as well as switch to hiring freelancers instead of increasing your staff.
These are just some of the things you may want to try.
Always have a reserve
Sure, you may believe that you need every single dollar in circulation, especially during the first several months of your business; however, keep in mind that a business that needs every single dollar to run isn’t a business with an efficient or sustainable financial system.
Simply set some money aside in order to have immediate access to capital when you need it.
Pick a better merchant services provider
A merchant services provider can make or break your small business. Choose the one that will maximize your cash-flow management abilities.
Some merchant service providers can give you the tech and know-how to track inventory and sales, manage employee hours, and other business-critical services. Compare the best merchant service providers to find the best one for your unique business.
Create a long-term financial plan
Have a monthly goal for at least a year for both revenue and cost. Try everything to decrease your cost and increase your revenue in order to meet your goal. You should be shooting for a specific number each month.
Don't worry if you don't fulfill your goals every month — hardly anyone does. The point of goals is to improve. If you see improvement, you've had success.
Remember that your small business will grow slowly and steadily when you are doing things right and not at all when you are doing things wrong. Explosive growth is an unexpected rarity.
Each of these tips may seem terrifying at first, yet once you start practicing it, it will come to you as natural as breathing.
These tips are not merely short-term solutions. It’s not like you’ll use finance software until you’re out of the woods and then completely abandon the practice once things are back on track.
You can apply these methods regardless of the business size, which should be in perfect agreement with your otherwise scalable business model.
Lauren Wiseman is a marketing specialist, contributor to bizzmarkblog.com, and entrepreneur. She helps clients grow their personal and professional brands in fast-changing and demanding markets, strongly believing in a holistic approach to business.