With spring in full swing and summer just around the corner, if you’re a small business owner who hasn’t been thoroughly reviewing your balance sheets prospecting ventures for better cash flow, the time has come to do so.
With an economy leaning largely against the crutch of entrepreneurs, innovative startups, and other business pioneers, knowing how to stabilize and grow your company’s cash flow is paramount if your eye is set on tangible profits.
John Roberts, Vice President for Small Business at Scotiabank sums this point up best saying, “successful entrepreneurs know that while their business may be profitable, cash is still king when it comes to growing their enterprise. Putting a solid cash flow plan in place gives entrepreneurs control of what flows in and out.”
Finding the balance between what flows in and out of your books certainly does not come naturally to many business owners, especially many entrepreneurs whose strategy revolves more around their inventive ideas than a careful approach informed by years of real-world business experience.
Here’s five ways to energize your cash flow effectively:
1. Pinpoint Your Cash Flow Woes
Don’t count on your expenses to disappear any time soon. Although they eat away at your bottom line, keeping them in check can give you the leverage needed to manage your expenses intelligently. Make a habit of reviewing your expenses as well as your suppliers to determine if you’re overspending on needless expenses or inflated prices.
Be sure to keep your eyes peeled for subtleties in savings you might not catch the first time around. For example, if you’re able to make payments to your suppliers early, many will negotiate discount opportunities with you. You can also use a credit card with extended grace periods to effectively slow the overall payment process and make transactions more manageable.
2. Get A Handle On The Condition Of Your Business
Don’t assume your business operates a certain way without taking the time to be an objective and realistic manager. Being pragmatic with your finances is essential if you want to minimize your risks and maintain a balanced budget.
Think of your cash flow as a thermometer you can use to take your business’ fiscal temperature. Define, manage, and monitor the factors that impact your cash flow including business expenses, payment terms, and sales volume among others.
Determine whether some factors are routinely emerging as the weak link in your cash chain and make the necessary adjustments before they have a chance to get out of hand.
3. Get The Most Out Of Positive Cash Flow Influences
Many credit card companies offer small businesses specially tailored loyalty cards geared towards making regular payments easier on a small business’ wallet. These sorts of deals usually offer incentives for common business transactions like buying office supplies, entertaining clients at restaurants, and even filling your gas tank.
Deals like these shouldn’t be overlooked no matter how small or insignificant they seem at the time. A few dollars here and a few dollars there quickly add up to quite substantial savings when calculated over a long period of time.
4. Acclimate To Shifts In Your Budget
No small business owner should count on his or her cash flow to stay stagnant. In fact, that degree of stability probably reflects a stagnant business rather than genuinely stable finances. Instead, be ready to adapt to a cash flow that evolves with your business for better or for worse.
Learning how to read the signs of a flow becoming increasingly problematic can be like a fire alarm going off in a building where you don’t yet smell the smoke or see the flames. In this way, it’s a great indicator for detecting inequalities or inconsistencies in your balances. By keeping a close eye on them, you can better assess the health of your small business over an extended period of time.
5. Eliminate Needless Expenses
By taking advantage of special offers catering to small business such as loyalty credit cards geared towards fragile small businesses, you can find access to a wide range of perks such as travel and rental insurance plans, and purchase security that can boost your small business through a carefully trimmed set of expenses. Extended warranty offers are also a great benefit, which allows small businesses to avoid extra monthly payments.
By actively pursuing offers made to help keep small businesses from drowning in payment after payment, you can keep your cash flow in a healthy state that will hopefully gravitate towards both healthy profit and a manageable set of expenses.
If you’re a small business owner swamped by the weight of your finances and you’re interested in hiring an outsourced accountant, contact us. Our start-up accounting and CFO services experts can provide you with personal guidance.