Cash flow tips and tricks for your small business
When it comes to managing a successful business, your main aspiration you’re likely to aim for is seeing your company grow and perform exceptionally well financially on a year-to-year basis.
However, cashing in big profits does not mean resting on your laurels: you also must consider keeping your cash flow consistent.
Where the profits that you make can provide a good indication of whether your business is operating efficiently, your cash flow is the metric that shows how money is entering and leaving your business. And if you need a positive cash flow, you need to ensure that more money is entering the business than the amount that is going out.
It’s a fact: any small business comes with operational costs and other expenses, but that doesn’t mean you cannot keep your cash flow healthy and ensure that you do not overspend.
In today’s blog, we are looking into some of the best guidelines that will help you maintain your cash flow status.
Let’s get started.
- Monitor your inventory status
If you are specifically a product/goods based business, do an inventory check to see which products are selling vs. the ones that aren’t moving at all. This will assist you curb bringing in more items from the category that is not selling and guide you on which items you need to sell or get rid of to make room for new high-performing inventory. For E.g., in order to get rid of the slow moving or stagnant items a warehouse sale is the most suitable strategy to be used.
- Monitor your spending
Just as your personal financial spending can be divided into wants and needs, the same can be said for your business too. For instance: having more office space is great, but it can become a financial headache if you don’t need it. On the other hand, having sufficient parking space for yourself and your staff would be a practical need. So, do not spend where you can save. If it’s not beneficial to the business growth on a day to day basis then it’s not needed for the business.
- Consider leasing instead of buying if your cash flow is still tight
Although many business owners might feel that they need to buy equipment or need to own their own business premises, leasing can be a good option if you are still building your business. Renting an office space or leasing supplies could save you money and allow you to have the right infrastructure and business tools, with smaller payments. Eventually your business will grow to the level where you can now purchase your own using this method.
- Keep an eye on your cash flow forecast
Forecasting can help you predict a probable outcome of your weekly, monthly or per quarter financials and when you might have a smaller cash flow or when you will be in a better position for spending. The best way to do this is to look at your historical data, as this could show your spending patterns during certain business periods. For e.g. look at past receipts, invoices, financial statements etc.
When you consecutively maintain a positive cash flow, you’d make better business decisions. You will be better equipped to grow your business at the right time when you eliminate your cash flow issues. So, put in the effort to keep a close eye on one of your most important assets.