Access to consistent sources of funds is critical for young businesses. Here are some smart ways that entrepreneurs can improve cash flow for their startups.
Editorâ€™s Note: This post was submitted by guest blogger, Ashley Lipman. Enjoy!
Running a business is something that millions of Americans want to do. In fact, a study has shown that over 60% of Americans want to be their own bosses. As for what types of businesses they can start, the opportunities are endless. You can open a store, sell a product, offer a service or nearly anything else you can think of.
Technology and rapid innovation over the last few years and decades has also allowed a variety of different businesses to be started with only a computer and some hard work. However, the one thing that is similar between nearly every business ever, is that they require money to operate. Without cash flow coming in, your business will not last very long.
With that in mind, this article is going to look at a few different ways to improve cash flow for your startup, so you can keep operating a successful business.
Invoice More Intelligently
In order to have any sort of cash flow at all, you need to be paid for the products and services that you offer. And to get paid, many small businesses will send invoices to their clients. However, getting these invoices paid in a timely manner can be the difference between having great cash flow, or struggling to get by.
As a result, you need to use a high-quality and creative invoice template when sending invoices. Your invoice should be sent promptly, should easily show how much your clients need to pay and when the payment is due by. If you want to up your cash flow even sooner by getting by paid quicker, consider offering some sort of bonus or discount for early payment.
Keep Cash Reserves
Just as an individual will keep an emergency fund in case of accidents or other unforeseen costs, it is important for businesses to do the same. While this is easier said than done, businesses and their operations are anything but predictable, so having a little money stashed away is a good idea.
Unfortunately, this is tough for some new businesses that are fairly strapped for cash, but do your best to make it work any way you can. While putting some money into an emergency fund instead of marketing, inventory or product design might make you grow more slowly, at least you will be able to recover and stay afloat if something terrible were to happen.
Running a business is all about projections. You need to use tools, data and software to find out how much money will be coming in the upcoming months, and how much will be spent. Many small business owners or entrepreneurs are very busy and donâ€™t often look ahead a few months or a year into the future.
Without planning and looking ahead, unforeseen expenses or slower periods of operation could lead to a stagnating cash flow, which could spell the end for your business. Planning ahead and forecasting can also help you find out how much inventory to purchase and when, which is something many new businesses struggle with.
Lower or Eliminate Some Expenses
When it comes to managing the cash flow of your small business, your budget and how much you spend is supremely important to the success of your business. A budget is all about keeping track of how much money is coming in and how much is going out. When you know how much you are spending (and on what), it will be easier to see what you can eliminate or reduce.
Maybe you are paying $50 a month for a subscription or add-on service that you hardly use. Or maybe you are using an expensive program when there exists a much cheaper one. Perhaps you are even considering hiring an in-house employee to handle incoming phone calls when you could save thousands of dollars by using a virtual receptionist service. Making these changes and â€śtrimming the fatâ€ť can free up a lot of cash and improve your cash flow every month.
Hopefully the tips and information included within this article can help you increase the cash flow within your company and keep it running successfully going forward. While there are other things you can do to increase cash flow, we feel that these are among the most important to implement.
About the Author:Â Ashley Lipman, Content Marketing Specialist
Ashley is an award-winning writer who discovered her passion in providing creative solutions for building brands online. Since her first high school award in Creative Writing, she continues to deliver awesome content through various niches.