Cash Flow Management
Cash flow management is an important practice every business should follow – especially small businesses. Small businesses work their way up with tighter budgets, meaning they do not have as much freedom as wealthy businesses. But that should not be a factor of disappointment, as necessary cost-cuttings here and there should improve the cash flow in the business as well as their profits.
This article will focus on various methods with which you can improve the cash flow of your business.
1. Cash flow planning
Planning is everything. If you want to improve the cash flow in your business, you must understand where exactly would you need to invest to support your business. Review your business finances monthly and ask yourself these important questions:
- Do I really need to invest cash in here?
- Is this going to bring profit long-term?
Once you answer these questions, the things should be very self-explanatory. Cut down the maintenance or budget on things that have less to no importance for your business. Cutting down such unnecessary costs will improve the cash flow and you will be able to grow your business better.
Planning is important if you want to improve the cash flow management for your business.
2. Plan your Inventory
Understanding inventory management takes some experimentation and experience around your business. At first, good chances you will not understand how much you should be stocking up. But don’t worry about it. As you invest time into your business, you will understand how your sales hold up, what are the peak hours for your business, and you should be managing inventory according to that. Don’t overstock your inventory. If you cannot meet your day-end sales, you will find it hard to make it to your profit goals.
Cut down on your inventory if you are overstocking. That way, you can maintain a steady and productive cash flow to your business.
3. Supplier Discounts
Suppliers often provide a bulk-purchase discount to their regular customers. If you are one, you should be seeking out such options for yourself. Not only you will be able to manage a better cash flow to your business, but you will also manage to yield better profits. Be on a good term with them and they will be considerate towards you as you follow the ethics of business. If your payments are always on time, if you treat them with respect, they are likely to repay you with kindness and discounts.
Be on good terms with your suppliers. Supplier discounts will help your business tremendously in maintaining a cash flow.
4. Product Discounts
Another way to effectively bring and maintain cash flow to your business is to sell your products effectively. Discounts can and will play hugely in the favour of cash flow management if done right. As discounts are still an effective method to attract customers to your business, consider planning it.
Use a combo to manage and sell off products from your inventory, as well as make a profit. You can also bring an exclusive discount system for returning customers and regular shoppers. Not only this helps in cash flow management, but it will also help you with getting some loyal customers. Combine it with good customer service and you will be making a good profit and maintain a good cash flow to your business.
Discount schemes work wonders. Use it to your advantage and improve your cash flow management game.
5. Reduce expenditure on advertisements
Advertisements, when done right, can do wonders for your business. But just how much should you advertise your business? This is an important question to ask. Advertising has gotten so affordable and effective in the digital world, that you may lose yourself in advertising your business more than it is needed. This can easily hurt your cash flow in the business.
So, how can you reduce expenditure on advertising? Simple! Make a plan. Many advertising platforms help you decide on a precise campaign these days; this also includes defining the exact target audience for your business. Understand what your target audience exactly needs and create your campaign around that, offering them a solution to their problems. Also, you can consider making an email list with your loyal customers and advertise through newsletters.
Related: Do you need to know how you can effectively advertise your business? Follow this article.
Target your audience precisely. Understand their demands and how you can provide them with a solution.
6. Use Technology to Your Advantage
In this digital age, technology has made so many things simpler, affordable, and faster. Use it to your advantage; adopt new ways of doing your business. Technology will aid you so much in reducing your business costs and improve cash flow management.
For example, if your business absolutely does not need a physical location, you can always opt-in for completely going digital and save massive costs. Managing social media presence for your business? There are many services like Zoho Social are available on the internet where you can schedule your social media posts. How about speeding up the transaction process with online payments or digital wallet payments? These small things go a long way in dramatically making your business efficient while saving costs.
Related: Need a website for your business? Take a look at our Website Design package.
Technology is the way to go in 2021 to improve the cash flow management in your business. Look around, experiment, and determine what works out the best for you.
7. Experimentation with Prices
Small business owners often feel anxious when it comes to raising prices. The usual thinking behind so is driven by their fear of losing customers. However, if you are providing quality services, if you have a good customer base who feels happy with your services, raising your prices is actually a step towards assured growth of your business. Experiment around the prices, take customer feedback and see how do you perform in making sales. Does it help your business? Are your customers still happy with your business? Ask yourself these questions, discuss them with your partners, and decide on a course for the future.
If you successfully raise prices without breaking the integrity of your customer’s trust and satisfaction towards your business, then it is going to be in the favour of your cash flow management.
Do not be afraid when it is about experimenting with your prices for services and products you offer. It is important in improving your cash flow management!
These are the 7 pointers you should always keep in your mind when you are planning to improve your cash flow management. Of course, there are other external factors that also affect this. Some of them are within your control, some of them are not. Sometimes, you may need external help. And if you do, do not forget to reach out for help.
Related: If you do need external funding, we have covered a few important points for you in our article Getting a Business Loan in Cape Town.
If you need our help in making a website or advertise your business online, you have come to the right place. We – Digital Lime Green – are a Cape Town based digital marketing and website design agency. To know more about our services, please visit our services page or contact us today to get more information.