In a good economy, 80% of new businesses will fail within the first two years. Unfortunately, in our current turbulent economy that figure is closer to 90%. Even existing small businesses with a proven track record are struggling to keep the doors open in these difficult financial times. Bouncing back when sales are on a down slope will require drive, determination, creativity, and strategy.
Small business owners need to be savvy and come up with real ways to reduce their expenses and increase their cash flow. In simple terms, less money needs to be leaving your account and more money needs to be coming in. It is an obvious statement to say that you need higher profits, but so many companies are missing opportunities to do just that.
This article will give you valuable tips on how you can shrink payables and increase receivables to keep your small business alive during these tough financial times.
Improve Your Cash Flow
A strong and consistent cash flow can be the deciding factor for any business’s success. That is why every business should actively take steps to improve their cash flow. Working with your suppliers to reduce expenses and negotiate longer terms can keep more money in your account longer. They are struggling too, so they will be accepting of your terms to maintain your business.
You can also negotiate shorter terms with clients, so that you are getting paid sooner. Improving your cash flow also involves expanding your customer base, so you are never waiting on one big receivable to cover your debts. An effective strategy for dealing with tough economic times means having several small clients that you can quickly invoice, so you have a constant flow of money coming in.
Take Advantage of Cost Effective Marketing Options
When times are tough financially, most businesses cut back on their marketing and advertising expenses. These are actually the situations where you need to increase your exposure and draw in new business. Thanks to the huge rise in social media followers, these sites have become the local business’s affordable solution for marketing to the masses. By creating a compelling Facebook or Twitter account you can communicate with hundred, thousands, or even millions of users at once.
Invoice Sooner & Get Paid Sooner.
Make sure your clients are aware that paying their bill is a priority. Use online invoicing software to generate the bill from anywhere and then email it directly to the client. Most programs will even allow you to schedule an automatic reminder notice, so the invoice stays fresh in the customer’s mind. The sooner the money comes in, the sooner you can use it to cover your necessary expenses and expand your customer base.
Cut Unnecessary Expenses
Every business has regularly payables that could be cut during tough times. They can eliminate membership dues, magazine subscriptions, and advertising campaigns that are not generating enough of a response to justify the expense. They can also cut labor expenses by hiring freelancers or using online businesses to cover duties that do not require a full time employee.
Most importantly, do exactly what you are doing right now. Keep researching ways to improve your company’s chances of succeeding. The more effort and energy you put into keeping your business alive, the more likely you will be one of the 10% that survives.
The article is posted by Gerwyn Wallto.