In hard times, cash flow can be a big problem.
Here are 7 ideas for quickly improving cash flow:
– Get control of your accounts receivable. For this, you need top notch paperwork and bookkeeping systems.
– If appropriate for your industry, ask for deposits or advances.
– Offer discounts for early payment.
– Negotiate better terms with your vendors.
– Develop a relationship with your bank and ask for a line of credit, perhaps secured by accounts receivable.
– Reduce costs; spend only for essentials or for things that are sure to deliver an immediate return.
– Defer all high risk projects for better times.
These suggestions, though, won’t solve the root problems of your business.
To start solving the root problems, look at the large gap between the typical small business and the top earning small business.
Top earning small businesses consistently earn over $365,000 net a year. And they keep making money even if the owner takes a two-month vacation.
Top earning businesses do three things differently.
First, they apply the model described in the E-myth series of books. The owner works on his business, not in his business.
Second, the owner applies the 80-20 rule. 80% of profits come from 20% of customers. The top earning owner focuses on this profitable 20%.
Third, the top earning owner makes sure he has access every day to accurate financial numbers. This owner knows that what you measure, you can manage, what you can manage you can improve.
To become a top earner, the first step is to free up time so you can work on your business.
For most small businesses, paperwork chaos and bookkeeping hassles are the biggest time wasters.
Jay Abraham, a renowned marketing expert, talks about the secret of the highest and best use of your time and talents. The concept of highest and best use is easy to understand – it’s about using your time and talents to their maximum potential.
If someone else in your business or outside your business can do a task better than you can, delegate that task.
If you’re not passionate about the task, delegate it.
If the task is not strategically relevant to your business, delegate it.
Paperwork, bookkeeping, and accounting are tasks that have to be done. But they do not have to be done by the business owner.
With new technology, you can inexpensively go paperless in your office in 24 hours. And you can completely outsource your bookkeeping and accounting!
By outsourcing these things, you free up huge chunks of time so you can start working on your business. And you get the accurate financial information you need to make profitable business decisions.