Practical ideas to spur business growth
When you are running a small business, the numbers matter. This is especially true when it comes to cash flow. If you have more money going out than you have coming in, your business will not survive for very long.
How can you improve cash flow? There are no absolute guarantees, but these six practical suggestions should help.
1. Review pricing strategies. Finding the “best” price to charge customers or clients is often difficult. However, if you are charging too little, based on what the market will bear, you are effectively hurting your business. If possible, do some testing at various price points to determine where you should be. Caution: Going overboard—charging too much—could be equally disastrous.
2. Upgrade equipment. Not only does outmoded equipment take up too much space, but it is probably not as efficient as the latest models. For instance, some companies are moving away from desktops to laptops that are more versatile for the staff. Put newer technology to work for you. While there will be an initial cost for a changeover, you will likely save considerably more over time.
3. Renegotiate contracts. Have you signed deals with vendors or suppliers that are no longer favorable? They may be written in black and white, but not necessarily in stone. If you plan to keep such arrangements for the foreseeable future, the other parties may be amenable to a mutually beneficial restructuring. Of course, not everyone will agree to this, but it cannot hurt to ask.
4. Focus on marketing. The “old ways” of drumming up business may not be working well anymore. Taking another look at your marketing program and making changes when appropriate could trigger more activity and greater revenue. Try to think outside the box. For instance, if you have traditionally relied on direct mail, you might shift to other forms of marketing. Also consider a redesign of your website.
5. Expand the product line. Are you offering only the same products you did a decade ago? It may be time to expand into new areas or at least fine-tune your products to reflect changes in technology or other developments. Similarly, if your company is a service provider, you may start delving into areas on the fringes of your main line of work. The worst thing you can do is become stagnant.
6. Add incentives. Cash flow problems often stem from slow-paying (or nonpaying) customers or clients. Give them a gentle nudge by offering incentives for early payment. Typically, you might discount goods for early payment or offer more attractive deals for larger orders. On the other side of the coin, you may find that implementing late-payment penalties encourages some customers to pay on time.
Do not expect to accomplish great things overnight. If you use one or more of these techniques, it may take time to see results on the bottom line, but you must remain dedicated. Eventually, your cash flow should improve, along with your company’s fortunes.
For more information, please contact your Marvin and Company, P.C. representative.