Almost all businesses experience fluctuations in cash flow at different times of year. Identifying which times are your slowest and planning ahead will keep your company running smoothly even when you don’t have a lot of money coming in.
As a business owner, you have certain expectations for annual growth. However, the amount of growth you’ll actually see each year may not be as much as you’d like. Look back on past trends to identify patterns of profit and loss.
You need revenue to continue operating when business slows down. Work with an accountant to create a savings plan that involves setting aside a specific percentage of your income. Secure the money in a fund or account that accumulates interest over time to guarantee yourself a revenue source for when sales begin to drop off. Reserving money this way also gives you something to draw on should business become unexpectedly sluggish.
You should always be looking at business operations to assess what’s working and what’s draining your resources. Keep a list of all the projects that are going on, and update it frequently to stay on top of progress and profitability. This makes it easy to identify anything that can be scrapped or put on hold during slow times. It’s also a valuable tool for managing day-to-day business operations in that it shows which employees are involved in each project, who is making the most progress and which endeavors are generating the highest profits.
If you run a business that has distinct busy seasons, hire extra help only when you need it. The rest of the time, maintain a core group of employees to handle year-round tasks.
This cuts down on the amount of training that needs to be done throughout the year and allows you to keep payroll costs low when money is tight. A lower amount of turnover among employees also ensures the efficient operation necessary to keep revenue coming in even when you can’t guarantee a high number of sales.
Should you come to a point where you need money in a hurry, be smart about where you get it. Consider taking out a Bridge Loan designed specifically to help small business owners who simply need bridge the gap until sales pick up.
Take a look at your inventory and see if there’s anything that can be sold back to the original vendor, to another business or to the public at a discount. Resolve outstanding payments from clients and customers as quickly as you can, and consider charging interest payments to those who are slow to comply.
When you make smart budgeting a regular business practice, you’ll continue to operate in the black regardless of changes in cash flow. Be wise with how you manage your money in daily operations, and you’ll enjoy lasting prosperity for your company.