4 Strategies to Prevent Your Small Business from Running Out of CashJun 02, 2021
How can a profitable business run out of cash and how to stop it?
If you want to build a successful business, the first thing you should recognize is that cash is king. Managing cash as an asset can mean the difference between just getting by, and producing exponential profits. But good money-management involves a lot of coordination. Business Expert Sharon R. Barstow advises that “working capital management is all about making the best use of your business activities to maximize cash flow. The goal of working capital management is to ensure that your business has sufficient cash on hand to pay for short-term obligations.”
Here are a few tips on how to streamline the cash-flows in your company:
1) Set Up a Cyclical Budget
Small businesses often get so caught up in conducting sales that they neglect to formalize financial planning. No matter what type of business you’re in, implement and stick to a periodic budget. Divide your fiscal year into quarters, and use these timeframes to coordinate your operations.
2) Think Past Breaking-Even
Debt puts a lot of pressure on business owners. Which is why breaking even feels like a momentous occasion once it happens. But be careful not to consider breaking even as the finish line. Because the ultimate goal should be to profit sustainably. Set your sights beyond the break-even point, and don’t go on a spending spree the moment you’ve paid off debt.
3) Treat Returning Customers Like Royalty
Return-business is the ultimate goal of sales. Not only does it signify the quality of your product, but it can turn your enterprise into a cash-cow. Figure out a way to maximize return business, and don’t take it lightly.
4) Diversify Your Collections
The one mechanism of your business that shouldn’t have any limitations whatsoever is how you physically collect money. If a payment platform exists, set up the infrastructure for it. Customers have many different preferences regarding how they part with cash, but all those various preferences should seamlessly converge at your point of sale.
Even though business is governed by many standardized rules and regulations, there is no universal cookie-cutter way to successfully run a company. Especially with respect to managing cash. The best approach is to adapt your operations to prevailing economic conditions. Configure your business to function as systematically, as possible. If you like what you just read from our blog, you’ll love the various informative courses, workshops and events listed on our websites and social media. Whether you’re interested in personal development, or overall improvement of your business, give us a Whether you’re interested in personal development, or overall improvement of your business, give us a call at 1 (888) 823-7757 to find out how The RISE Academy can help you break past your daily struggles and start soaring in success. For business development coaching by Richard Martinez, call at 626-202-2291 or follow us on Facebook and Instagram.
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