Increasing cash flow is vital for both short and long-term success. Many small businesses fail because they don’t have the funds to wait for bigger sales to come. Here are some ideas for increasing cash flow for your own small business.
CREATE A PAYMENT STRUCTURE
One of the most common reasons for small businesses not getting paid in a timely manner is because they have a poor structure. You may not even have any structure at all. You should start with a quote in most cases, which the customer agrees to when they place an order. This is then legally binding so long as you carry out your end of the work. Next, send them an invoice which clearly states the time limit for payment – usually 30 days. You can even ask for a percentage of the fee upfront for starting the work. Once a week you should set aside time to check which invoices have been paid and send reminders for those which haven’t. Charging late fees will also help to keep customers paying on time.
USE ACCOUNTING SOFTWARE
If you don’t keep track of the pennies, you will find it hard to keep on top of your cash flow. Use accounting software to track incomings and outgoings. This will help you to see when bills are going to be due, so that you can try to hold on to some money to cover them. It will also help you to look ahead and see which invoices are due to be paid soon if you want to make a financial decision. Having it laid out this way, you might also begin to see which clients are consistently late and may need weeding out.
RENT OUT SPACE
If you have spare room that is not being used, now could be a good time to turn it into extra income. You can rent out spare offices, your garage, or any warehouse space that you may have. You could even rent out a desk in your office as an office-share. This is an option which is becoming increasingly popular among start-ups. It helps to make more money for you, and may even allow you to meet valuable contacts who can bring something to the table. Use every available resource to its fullest – you may even be able to rent out equipment when you are not using it.
ESTABLISH A SIDELINE
It may be possible to use your skills or products to set up a side gig. One example could be for your service: if you are a photographer, web designer, or hairdresser, for example, you could offer lessons for people who want to learn how to do it themselves. You could partner with another small business to offer joint services. A hairdresser and photographer could team up for a makeover photo shoot. You may even be able to use skills that help with your business – like being good with social media – to earn extra money on the side.
DROP THE DEAD WEIGHT
Finally, try looking at your overheads. Are there any costs you could do to get rid of or reduce? One trick is to go to your utilities suppliers and tell them that you are thinking of switching to another company. They are likely to offer a deal so that it is worthwhile for you to stay with them. Cut out unnecessary subscriptions or recurring services. Cut off any clients who consistently don’t pay on time or waste your time in other ways.
It’s always possible to get more cash flow out of your small business. With these tips, it should be easier to do just that.