Cash flow is the driving force behind any business. Without it, you could not pay employees, produce goods or services, grow your business, or even keep the doors open – and the lights on. With that thought in mind, today’s small business owner blog post is all about keeping the cash flow…flowing.
Cash Flow Tips for SBO’s
Properly managing your cash flow is one of those tasks that a lot of small business owners do not fully grasp, and can often seem overwhelming. Unfortunately, having a steady – and reliable – cash flow is crucial for your business to keep functioning. Without it, you are a fish without water.
Below are some cash flow tips that should help simplify matters and let you pay more attention to what matters the most – growing your business.
Make Banking Easy
Driving to the bank and waiting in line to make a deposit is time consuming and, if you handle a lot of checks, can really eat up a lot of your time. What’s worse, if you wait until you have a decent amount of checks piled up to deposit them, it slows down your cash flow, which can make it harder for your business transactions to flow smoothly.
One trick to get around this is to set up alternative forms of payment. Taking payment methods such as Paypal or credit cards can reduce some of the hassle of having to make a deposit, though they do come with an added cost that you would need to weigh versus convenience.
Additionally, many banks now offer the ability for you to simply snap a photo of your checks to deposit them, meaning you no longer even need to go to the bank to make a check deposit. This is another great way to keep your cash flow rolling and save yourself time and aggravation.
Keep Business and Personal Life Separate
Just as you don’t want to bring your personal life into the work area (and vice-versa), you also don’t want to mix your business finances with your personal ones. This can prove to be messy for many reasons, the least of which is taxes.
Instead, keep a separate checking account and set of credit cards that are specifically for your business. If you pay yourself a salary, cut yourself a check from the corporate account. Come tax time, all of your business expenditures will be easily separated through this method, and you won’t have to worry about mixing up expenses.
Understand Your Expenses
One of the ways you can keep the cash flow rolling in is to entice customers to purchase your products or services. While your offerings should sale themselves to a degree, there are times where you may wish to offer special promotions or discounts to help lure in new clients or get a boost in business.
Understanding your expenses will let you know how much you can afford to mark items down or what sort of promotions you can undertake. For instance, if you mark a product down so much that you lose money, you have to ask yourself if it was really worth it. If you use this method with the goal that customers will purchase other, higher profit margined items in your store one lured in, this might be a good plan. However, you won’t know any of this, or be able to plan for it, if you do not understand how much things cost to begin with.
Rinse and Repeat
Most businesses rely on repeat customers for the majority of their cash flow. After all, getting new clients is expensive, and the cost of attracting them usually is not covered with their first – or even second – visit. Because of that, you want to entice your customers to visit time and again.
If you are in the services industry, make sure you treat each client the way you would want to be treated. Take that extra time (or have your employees do so) to make sure they are completely satisfied. A customer walking out the door angry isn’t just a person…its your cash flow.
If you run a product based business, take advantage of low-selling items and excess inventory to offer up special deals for customers. If you see the same customer in your store, offer them a small discount on their order as a “thank you” for dropping by again. You would be surprised how much such a small gesture will mean to them.