As a new entrepreneur, there are lots of aspects of business that you may not have had experience with, even if you have been a part of a company before. Although there are many things to learn when you are first starting out, it is fundamental that you have a grasp on the importance of cash flow and how to improve if for your small business. To help you get started, here are six cash flow tips that are perfect for new entrepreneurs.
Be a Frugal Spender
Cash is the lifeblood of any business, so it is important that you monitor the amount of cash leaving your business in comparison to the amount that is coming in so that you do not go into debt. If you don’t keep a close eye on your company’s funds, you will find that having minimal cash on hand will not only inhibit your ability to successfully run your business, but it will also prevent you from getting a loan to dig you out of debt should your business need the help of a loan in the future.
If you notice that income for your business is low, the best way to minimize the amount of money leaving your business is to spend money frugally. Making do with supplies and equipment you already have, looking for free alternatives or previously owned options, and choosing less expensive supplies will help you keep cash in your business’ hands while in-flows are low.
Look for Additional Ways to Bring in Income
When your business is first starting out, cash flow may be lower than that of a well-established business, so you may have to look for ways to generate extra income outside of the business. You could do this through investments in the form of day trading, where it’s possible to make a very respectable living once you’ve learned the ropes. This type of trading lets you invest in a stock for a shorter period of time—typically a day—so that you can make a small profit in a short amount of time. It’s possible to generate a solid income from a small amount of capital when turning it over rapidly in a series of trades. The sooner you get started, the more success you’re likely to have.
Ask for Extended Payment Terms
When negotiation a deal with a supplier, do your best to create payment terms that will benefit your business. By spreading out payment terms you will be paying in smaller amounts which gives you more wiggle room in your monthly spending budget. Again, you have to be conscious of your business’ ability to keep up with payments because your small business does not have the luxury of taking out a loan if you fall into debt.
Use Flexible Labor
When you begin hiring for your business, don’t trick yourself into believing that you must immediately hire a substantial team of full-time employees. It’s possible to work with freelancers and use short-term contacts to secure labor if you need to save money on salaries. To effectively do this, create a training program that is quick to learn so that new people can join the business without wasting the short amount of time on their contract.
Have a Flash Sale
A flash sale is a method of increasing cash flow because it tends to generate a sudden rush of purchases over a few short days. If you choose to use this method, then all sales should be made using immediate payment methods instead of 30-day payment terms. Also, make sure you Use email to notify previous customers about the upcoming sale.
Cash flow is critically important to any business, but especially a new one. Without access to fresh capital, running out of money often spells disaster. By following the above mentioned tips, you will be able to better protect your business from financial disaster.