How to Ensure a Constant Cash Flow

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The biggest and most common mistake new business owners do when starting a company is putting business goals before the cash flow of their company. Ensuring you have a steady cash flow should be on every entrepreneur’s mind.

So here’s what you have to do to ensure that the cash flow is pumping. It’s a given that you need to allocate time on building a brand that will generate leads. After all, this will ensure a constant stream of “free cash flow”. This represents the amount of money that comes in your company that does not have to be used for expenses. In the long run, if you do not have the necessary funds, you will not have enough time to worry about it because you’ll be out of business sooner than you might think.

If it is possible, try and keep 10 or 20 percent of your monthly revenues on hand because that will help you grow your business faster by reinvesting those particular funds. Whether it’s purchasing extra products services lines, finding even more suppliers or enlarging your team even more.

Related: How to Keep Cash Flow Pouring In

1. First of all, you should be a master at knowing your expenses. Even though the fact that discounts -through coupon sites or other sources- can facilitate the attraction and retention of customers, selling products at a loss simply cannot generate cash flow. While you can do that, if it were up to me, I would ever discount. However, should you choose the former, make sure you know all the costs and impact of the products and services you are offering and brace yourself for the fallout. Others things you should take into account that are extremely important are: the overall cost basis -the amount paid for something-, the best-scenario amount of money you should charge, the cost of your offers and the profit margins of your services or products.

2. Despite the fact that discounting isn’t a good option, adding value by bundling products and services is the best way to go. By doing so, this can inject major amounts of tangible and perceived value in their offerings at a reduced cost.

Take for example the maintenance agreements that car manufacturers provide when one buys a new car. This ensures that customers will not waste time in a dealership while also adding value by limiting the maintenance costs. In other words, you can increase the initial price point given the fact that you lowered a possible risk by offering a standard guarantee.

3. Find a way to come up with a back-end service or product. If your initial offers proves to be a flow when trying to find new customers, you should find a way to create higher price points for back-end products or services. For example, if you own a catering firm you could offer the first hour for free, while for the subsequent ones you could drive up the price.

4. Repeat business should be encouraged. Let’s say you’re in a business that is volume-driven such as retail. Having repeat shoppers is your best way to ensure not only cash flow, but also profit and subsequently growth. Most oftenly, you won’t see a profit until the fourth or even fifth time they purchase products or services. That is the main reason why you should focus on making your customers come back as often as possible.

You should take into account loyalty programs, VIP offers and other such programs that drives and ensures repeat business. Moreover, take notice that the word “free” is a great incentive among shoppers. The good thing is that the costs of funding a freebie can be covered if you have a surplus of low-cost inventory, yet valuable add-ons.

5. If everything else fails, go ahead and pre-sell your services or products. By doing this you are not only encouraging the sales boost but also making your customers aware and allowing them enough time to plan for the next time they come through your doors. Last but not least, you could also offer one of your old and outdated products at a pre-determined price.

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