In today’s turbulent business environment, businesses big and small are at risk for cash flow woes. We’ve discussed what it takes to keep a good balance of cash flow in the past, but for those who find their businesses pulling in drastically less earnings than the projected you’re probably searching for options to get your expenses balanced properly.
Stabilizing your business’s cash flow during a period of downturn or other unfortunate circumstances that affect your finances is something entrepreneurs and small business owners deal with every day, so don’t panic, there are plenty of options to choose from.
Let’s take a look at some options geared specifically to startups and small businesses in search of a plan to get back on track:
It’s not uncommon for developing small businesses to find themselves in a situation that requires a heavy investment in order to secure a larger return down the road. While these decisions can ultimately turn into growth, they can wreck havoc on your cash flow in the short term––a dangerous scenario to be in if you’re hit with large bills or unexpected expenses.
One way to provide an extra layer of insurance after the investment is to reinvest the founder’s salary back into the business until you start seeing growth again. Temporarily giving up compensation can be well worth it in the long-run if it means a bigger return down the road.
Although there are countless digital tools available to help small businesses automate and organize a number of tasks, it’s easy to overload yourself with software subscriptions and other tools you simply don’t need.
If your expenses are weighing heavy on your cash flow, go through your bank statements and highlight reoccurring expenditures that aren’t driving any value for your business. Pull the plug on as many as you can and reorganize your workflow accordingly.
If you don’t have a customer reengagement system in place to reach out to former clients, you could be missing out on huge potential. All too often startup owners fall into thinking that just because a client or customer no longer does business with you, they were unsatisfied with your products or service.
This often isn’t the case. Many clients disappear only because you’ve left them alone for too long. One of the easiest and most effective ways to regain revenue is by putting together a reengagement email to put older customers back in touch with your service. Include a compelling offer to grab their attention and you’ll be surprised by the results.
If you’re in a considerable financial slump and employ a team dedicated to seeing your company ultimately succeed, reformatting your salaries with a smaller base pay and higher bonuses and commission payout may inspire your workforce to go the extra mile with their work––ultimately helping the business while earning themselves the reward.
If you’re hurting from a short term cash flow problem, but see big gains in the future, add a discount offer to those clients paying on a monthly basis giving them a break in the future in return for a year’s payment in advance. Depending on how successful it is, you may see your books flooded with immediate cash you need to stabilize your expenses. Just be sure to prepare for the discounted rate in the future.
If you’re looking for new ways to foster a healthy environment helpful to your employees and your bottom line, contact our start-up accounting and CFO services experts for assistance.
Photo credit: Ken Teegardin
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