It’s no secret that one of the ways many people choose to improve their personal finances is by running a business. They might do so as a sideline, perhaps from home in their spare time, or it might be their primary source of income.
The trouble is that some businesses can waste a lot of money if they aren’t careful. You’re likely reading this article today because you’re an entrepreneur, and you’re worried that your business could be spending more than it should.
With that in mind, take a look at the following practical steps you can take to boost your business cash flow, save money, and keep your costs down:
1. Review All Deals With Suppliers
Whether you sell products or services, you’ll likely buy things from suppliers regularly to facilitate the sales of items your business offers its customers. One issue that many businesses of all sizes rarely known about is how their suppliers may not offer good deals.
It makes sense to perform periodic checks on the prices of products and services that your suppliers sell to you. That’s because you could potentially get better deals elsewhere, lowering your cost of sales and increasing your firm’s cash flow.
2. Review Learning Options for Employees
If your business has employees working for it, the chances are high that one of the perks of working for you is how all staff can improve their skills or learn new ones through various learning and development pathways.
It’s worth taking some time to determine if they all offer value for money for your staff and your business. In particular, you should look at what’s offered for digital learning and consider switching providers if you can get better value for money elsewhere.
3. Have a Strict Invoicing Policy
Do your customers consume your products and services and pay for them at a later date? If so, you’ll likely invoice them at a fixed point each month or week. One challenge with that approach is some customers aren’t prompt at paying their bills.
As you can appreciate, late payments will affect your cash flow – especially if overdue invoices are for large sums. That’s why you should have a strict invoicing policy and charge interest and late payment fees where necessary, along with credit checking new customers.
4. Increase Your Prices
It’s a standard business practice to raise prices if the cost of sales increases to unsustainable levels. Keeping the same prices all the time irrespective of market conditions will result in lower profits or worse – and that’s not something you should do.
Of course, you must strike a balance between keeping your prices competitive and ensuring your employees get paid fairly for their hard work. It’s a fact of life that prices of almost everything increase over time for various reasons. Don’t feel frightened of raising yours.
5. Consider Using Invoice Factoring
Does your business frequently issue invoices for large amounts? If so, the last thing you want to do is suffer a catastrophic loss due to non-payment from a recipient of such an invoice. Many small businesses end up going bankrupt because of non-paying customers.
One way to protect yourself from such losses is by using an invoice factoring company. They will pay you each customer’s invoice (less their fees), and, in return, they will chase your customers for payment of those invoices.
6. Target New Markets
One creative way to boost your business’s cash flow is by targeting potential new markets for your products and services. For example, you may sell exclusively to individual consumers, but you could adapt what you sell and target commercial and industrial clients.
Finding new target markets should be part of most entrepreneur’s long-term goals as it offers obvious benefits like new sales leads and increased revenue. Consider conducting some thorough research and determining which new markets might be suitable for your brand.
7. Liquidate Old Stock
Last but not least, does your business sell physical products to its customers? If so, you will probably have items that rarely sell, if at all. The trouble with keeping such stock is that your firm’s money gets tied up in those items when it could be helping to grow your business.
It makes sense to review your stock and your sales patterns. Which products sell like hotcakes, and which ones are just sat in your warehouse gathering dust?
When you’ve determined which products aren’t selling well or at all, it’s worth liquidating them. After all, any money is better than none.
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