Business writer Cherise Castle-Blugh reminds us of the importance of having the money to pay the bills
Let’s Talk Cash-Flow
When we talk about "cash-flow", we are talking about one of the most common and underestimated fiscal afflictions that entrepreneurs face.
Quite often, a constant cash flow is not at the top of an entrepreneur's list of things to ensure when starting a business. Most businesses and individuals become dependent on just one stream of income. But it is no secret, that running expenses and generating cash to meet overheads on a frequent basis, can become a difficult and daunting task in no time, if a secure and constant cash flow is not maintained. Sufficient cash flow is a fundamental aspect of all businesses to ensure its survival. The primary goal should be to ensure that more cash enters the business than what goes out.
A business's cash flow must indeed be guarded.
Here are some quick tips to generate a Constant Cash Flow, but nothing is overnight, however with dedication and a clear understanding, you should be able to see a change.
Make Everyday A Pay Day
Sell, Sell, Sell! Everyday, businesses must seek to make money. What products or services could you sell every day? Keep in mind that clients are interested in how your products and services can help them. Consistently provide value to your clients; Master selling techniques; Learn and implement income producing strategies; Spend less time on things that are not leading to income; Embark on increasing your exposure - let your value be seen and heard of. All these can help you close sales much faster.
Pre-Sell Products or Services
Pre-selling is the number one way to ensure that you have an audience. Once you do, you can identify exactly what your audience wants and needs are. Pre-selling assures that you're going to make money.
Aim For Repeat Customers
"A bird in the hand is worth two in the bush".
Think about it. Isn't it an easier task to keep customers than it is to try to make new ones all over again? Businesses should invest in finding ways to keep customers coming back. Focus on an incentive program that induces customer loyalty. While saving time and money, you'll also be securing a constant cash flow.
Create Back-End Products Or Services
Producing one product is not a business. What happens when your front-end product stops bringing in sales? It eventually happens, and if you don't have fall back on a strong back end set of products or services, your business will eventually die.
Keep Track Of Your Expenses
Entrepreneurs know that even the smallest expense can mess up your finances. One way to make your budget work for you, is to monitor and keep track of ALL expenses. Shrink cash outflows wherever you can. Monitoring cash inflows and outflows is a great start to securing and staying on top of your business's cash flow.
Monitor Inventory Turnover
Monitoring and managing your business's inventory is critical to your organization's profit and success. When this is done effectively, businesses can evaluate their financial performance and take the necessary actions like selling inventory, collecting outstanding revenues and paying off creditors in order to avoid cash flow shortages.
Create Incentives For Prompt Payment
Don’t allow customers to lag in their payments without a penalty. A customer who does not pay isn't really a customer, but rather, an expense to you and your business.
Collection lag can negatively affect a business's cash flow. A delay in obtaining outstanding revenues will create cash flow problems for businesses that can't afford to wait for payment, as expenses grow while your cash flow shrinks. Aim to motivate your customers toward prompt payment. Your goal should be to collect payment for your services or products before or shortly after incurring the expense of producing or delivering them.
Send Invoices Early
Remember, always try to get money into your business. Sending invoices early can ensure quicker payments from customers.
This list can go on. Entrepreneurs must understand that cash flow is the lifeblood of any business and should not be ignored. It is imperative, that time is taken to secure ways to generate positive net cash flow and understand the ins and outs of cash flow management, in order to ensure the health of your business.
The Timely Entrepreneur
contributed by Cherise Castle-Blugh