Starting any small business is incredibly hard and let’s be honest here, the success rate for a start-up business isn’t the greatest by any means. The main reason is cash-flow or lack thereof. Here are some Remedies for Small Business Cash-Flow Issues that will surely aid in achieving and maintaining a positive cash flow balance at all times.
Let’s take a few minutes and discover the Top 5 Remedies for Small Business Cash-flow Issues.
1. Stop taking home a salary.
That’s right, the first thing you need to do is stop paying yourself. Granted that it may seem a little extreme, at the end of the day, you take what you need to survive and push all your extra cash you can right back into your business. This is not to suggest, however, that you don’t ever start taking home your deserved salary, this is the sacrifice one must make sometimes to ensure that the business survives and thrives.
2. Keep your sales projections realistic while optimistic.
What happens in your first year of sales sets a standard of what you can expect to earn in the coming years at that exact period. Keeping your projections realistic while optimistic is all about not having to spend if you absolutely don’t have to. Projections are just that, they aren’t a “for sure” thing by any means. Too often than not, the biggest mistake is over projecting what your sales are going to be which in turn leaves you with extra overages as opposed to cash in hand.
3. Have a Cash Buffer
It is always a great idea to have at least 2 months’ worth of operating costs already in savings in the event of an emergency, over projected sales and a plethora of others. You never know when you may have to reach into savings for that inopportune occasion. Having a Cash Buffer will help displace any dramatic expenditures and help you better plan for the years to come.
4. Keep on top of outstanding invoices:
Nothing can get you stuck in a rut really quickly like past due invoices from your AR / AP department. Whether its bills owing or owed to you, if you are not on top of it, it really has a snowball effect that can certainly dig you into a deep rut rather quickly which in turn, restricts your cash flow and wreaks havoc for your bookkeeping as well. Not setting clear payment boundaries with your clients sadly, you may just end up on the bottom of their list. When your invoices are in good standing, you have a much clearer and direct path to ensuring positive cash flow.
5. Use of a cash-flow budget:
Having a clear and concise understanding of your business’s daily cash flow makes for a much easier way of navigating your business. Once you’ve gotten on top of your invoices, made sure your sales projections are realistic and attainable, taking the time to track your flow of sales and expenses using a cash flow budget will help with determining at what points during the year you will have more money going out than coming in. This is a fantastic way to make sure that you have readily planned ahead for these occasions and have budget accordingly.
Owning your own small business is no small feat and takes a ton of hard work, determination, and planning. When properly informed and put into use, your small business will fast become everything you want it to be.
Have you been applying any of these strategies in your business model?