Tips to manage cash flowMar 02, 2022
Ask any entrepreneur about the biggest challenges of running the show, and you’ll more than likely hear mention of maintaining a healthy cash flow. Although it sounds like an easy task (in theory), numerous variables make this difficult. Clients who don’t pay on time, emergency expenses, sudden increases in costs, and poor planning are all reasons that business owners struggle to keep their cash flow steady and predictable.
As a brand-new business owner, having a solid grasp on the habits that will keep your cash flow running smoothly is essential for success. Here are some strategies for entrepreneurs to follow to achieve this goal.
Identify and eliminate unnecessary spending
A significant drain on both personal and business finances are unnecessary expenses. Impulse purchases, unneeded subscriptions, and paying higher than average prices on products and services can all result in excess spending.
Before diving into more advanced strategies, thoroughly review your current expenses and spending habits. Is there a service that you could cancel? Are you paying too much for your website hosting? Do you really need that extra phone line? Take a deep look at what you pay for on a regular basis and eliminate anything that is not needed.
Is renting your current office space cost-prohibitive? Then it may be time to consider setting up a dedicated at-home office. Nowadays, it’s easier than ever to run a business right from your home with minimal fuss. In fact, you could even set up shop in a corner of a room. Keep in mind that changes you make can have an impact on the value of your home; if you plan to sell at some point, make notes and keep receipts of the changes you’ve made.
Review and assess your billing practices
How you bill clients/customers — and when you pay vendors, employees, and freelancers — has a massive impact on your cash flow. Having to pay large bills a week or two before your clients/customers pay you depletes your balance unnecessarily. In the event that your clients/customers pay you late, this can result in a crisis that could have been prevented.
Straighten out any related issues by reviewing and assessing your billing practices. Do you need to shift the dates you require payment? Alternatively, could you request new due dates for what you owe each month to spread your funds out more evenly? Just a few changes can keep your bank balance much steadier throughout the month.
Have multiple streams of income
Just as with your personal finances, having multiple streams of income for your business is a wise move. When purchases slow down, your cash flow can suffer big time. Rather than relying on the buying of your standard goods and/or services, find other ways to bring in funds. Sign your business up for an affiliate program, host online or in-person classes, or publish a book. Experts recommend having seven streams of income for your business.
Begin using cash flow monitoring software
Take your cash flow monitoring to the next level with innovative computer software. Because of the valuable insights provided, you can make better decisions with financial reporting software. With the right software, you’ll have access to reporting tools that can reveal a number of core metrics. These tools allow you to better monitor cash flow trends, review specific time periods, and to create/sort cash flow categories.
Utilizing the tips above can not only help you identify present challenges, but they can also help you avoid cash flow problems in the future. When you have a need for funds, keep in mind that methods of fundraising include raising investment privately or publicly via crowdfunding - both of which ISQ can help with. Crowdfunding offers multiple benefits, as well as money in the bank, like marketing, exposure, gaining brand ambassadors, and an engaged investor base which all helps to drive the business forward. If you’d like to get in touch to discuss your funding needs, we can help you plan, prepare, and launch a successful round of funding for your business.