Simple Savings Can Keep Cash Flowing For Your Business
If you’ve taken the leap and chosen to startup your own business… congratulations! You really are defying gravity. You trusted your instincts, closed your eyes and leapt. Now, anything is possible. You are the master of your own destiny. Unfortunately, when you’re defying gravity, you’re plagued by the ever-present fear that you could come crashing down at any moment. You’re flying solo, making quick decisions on the fly with no clear idea of how they may affect the health of your business in the long term. It’s a scary, exciting, weird and wonderful time. If only there was some way you could embrace the excitement and feeling of infinite possibility and jettison the sense of dread. Perhaps it’s simply a case of considering how you can insulate your business and your reputation from risk. Of course, risk is an inevitability in any business venture and any business, especially a nascent business like yours is vulnerable to risk. However, perhaps the biggest risk entrepreneurs face is a disruption in their cash flow. When you’re trying to get your business off the ground and pushing forward for growth, there are few things more important.
Business health starts and ends with cash flow
Your cash flow is intrinsically tied to the health of your business. A healthy cash flow ensures that your vendors are paid on time, that your shelves are well stocked, that your employees get their wages when they’re expecting them and that your business steers clear of unnecessary debt. Of course, debt is a necessary part of business; few new entrepreneurs can afford to launch their enterprises without considerable borrowing. But if you’re to pay back your startup costs on time, it behoves you to steer clear of extraneous debts elsewhere. A lack of cash flow can lead to unpaid bills, debts and vendors which will sour your business relationships and likely incur fiscal penalties which eat into your profit margins.
Debt can quickly become a black hole for businesses. It can impede profits eat more and more into your margin with every month, preventing you from being able to invest in your business and facilitate growth.
So, entrepreneurs are faced with a fundamental dilemma; how can they maintain cash flow and keep debt at bay without compromising on quality or under-investing in their business? The simple truth is that even the smallest things can all add up to make a big difference…
Savings, not cuts
While there are ample opportunities for savings in small business, entrepreneurs must condition themselves to think in terms of savings, not cuts. They need to cut extraneous costs without cutting essential services or resources. Fortunately, there are a plethora of ways in which you can do this. Very often it’s simply a matter of diligence and tenacity in finding the cheapest suppliers without compromising on quality from finding a reputable vendor of discounted inks and toners for your printers to buying used or reconditioned office equipment. Anywhere you can reduce costs without compromising the quality of your operations gets a thumbs up!
Err on the side of caution when ordering inventory
If you run a retail business, you may find it a tricky balancing act to identify how much inventory you need to order. You don’t want your customers to be put off by bare shelves, yet at the same time you don’t want to tie up your cash flow in stock that will sit gathering dust on the shelves. When starting out, it’s best to err on the side of caution when it comes to ordering inventory. If a product proves successful with customers you’ll know to order more. On the other hand, if a product languishes on the shelf, throwing a flash sale may be enough to clear it. Sure, you might take a slight hit on your profit margin, but as you haven’t over-ordered you won’t be stuck with shelves full of products which nobody wants to buy.
Cutting HR costs without cutting people
While your vision and expertise may be the guiding force behind your business, it’s the people behind you who will make it truly great. While human resource costs are a necessary overhead to maintain the quality of your operation you can still cut HR costs without cutting people.
One way to do this is by embracing telecommuting and allowing your employees to make a vital contribution to your business without costing you money. Another way in which you can reduce HR costs is by outsourcing essential functions such as marketing, IT and indeed HR. This ensures that you get the assistance of top tier talent at a fraction of the cost.
Maintain good relations with your vendors/suppliers
Your vendors and suppliers are most likely small businesses just like yours. As such, they have cash flow of their own to maintain. If you pay on time (or even early) you can become a very valuable client to them. This gives you bargaining power. If you have a good relationship with your vendors you can afford to be cheeky. Ask for a discount for early payment. Most vendors would rather be paid a little bit less so long as it means they get paid on time.
Let your happy customers do your marketing for you
Marketing costs tend to yield pretty high ROIs but if you simply don’t have the budget for digital marketing, why not let your happy customers do your marketing for you? Incentivize them to share pictures of themselves using your products or post 5 star reviews of your business on Google. Set up your own hashtag and encourage customers to use it. This will create a sense of buzz and excitement around your business while the plethora of positive reviews will help you to build trust in your brand while also creating a sense of intrigue. If you work with other businesses of good standing in your local community, ask if they can favour you with a backlink to watch your SEO skyrocket. Properly motivated, your customers can wind up doing a lot of your marketing for you.
You don’t have to make deep cuts to maintain a healthy cash flow. It’s simply a matter of making small, simple savings wherever you can. It can all add up to make a big difference!