Getting your start up going can be stressful enough without worrying about ways to get your cash flow heading in a positive direction. When doing your books for the first couple of months, it is almost guaranteed that the bottom line will be in the red unless you have already established your business before officially becoming a start up.
As a new business owner, one of the scariest statistics for you is that within the first year, 20% of start ups will fail due to various reasons . You do not want to become one of those statistics, which is why you want to find ways to improve your cash flow in today.
Luckily, there are numerous ways to get your business out of the red and into the black at the end of the month. The only way to guarantee that is to get control of your cash flow from the outset. Just because you have a loan from the bank or your business partner does not mean you can go all out and buy the best equipment you can find and invest in the software the big corporations use.
While it would be nice to have such things, until you scale your business you need to ask yourself if you really need them or whether you can manage with items that can get the job done but for much less.
So, let's get to some of the things you can today to improve your cash flow and which will make a difference you can see tomorrow.
Manage staffing
You will hear this time and again because it is one of the most crucial areas of any business - managing your staffing expenses. The great thing about the modern workplace is that you can hire people who work from home or who are independent contractors, meaning you can avoid the expense of providing a workplace for them. In some cases, they will also be responsible for paying their own insurance premiums too. They may cost a little more in wages, but the savings will make up for it by a long shot. Go through any people you do have on site. If they can, consider letting them work from home too.
Manage company expenses
Even if you only have a few trusted employees working for you, it is important to get employee expenses independently checked. You can get a line manager to approve expenses first before using an expert to complete your bookkeeping and accounts.
Small business accountants, BrooksCity said, "An accountant can easily take on the task of keeping track of all your expenses using software that will give you up-to-date data on your cash flow. From there, if a problem is apparent, you will know about it straight away".
Offer discounts for early payments
If your business has accounts receivable, you may want to consider offering customers with revolving accounts an early-payment discount. This will help ensure that you get paid what you are owed every month, but it will also bring the money in sooner so it is on the books before the end of the month. This may not seem like a big deal, but you only need a few accounts receivable to go into default to see why it is better to encourage customers to pay early in exchange for a small discount than to risk losing the entire amount and pay someone to try and collect on the debt.
Invest in your business
This may seem the opposite of what you are trying to achieve, but you never want your business to grow stagnant. If you find yourself stuck in a rut and your company does not seem to be moving in a positive direction, you need to make some changes, or you will see it begin to take a nosedive.
It may seem risky to invest more money into something that appears to be failing, but if you have completed your research, you will already know what the upcoming trends are in your business. You will have the inside track on what investments you need to make to stay ahead of the competition. If you haven't completed your market research, you may have just found out why your company went flat in the first place, so get to it.
Final thoughts
Running a business is not as complicated as some people think, but it does take some serious dedication. One of the most significant issues you must deal with is achieving a positive cash flow and pushing towards a future filled with more. Generally, a business with good cash flow will have a positive bottom line at the end of the year.
The key thing to remember when chasing this goal is to know your limitations. If you are not an accountant, it may be acceptable to do the daily bookwork, but get the help of a reputable team of accountants to help you with the monthly and yearly books, especially those that will be sent to the HMRC.
Now that you know what needs to be done, roll up your sleeves and raise that cash flow to create a better life for you and your family.
Copyright 2022. Article was made possible by site supporter brookscity.com.