Business owners are similar to jugglers. You have to balance all aspects of your business or risk everything falling down. One aspect in particular that needs a lot of attention is your cash flow.
Cash flow is the amount of money your business made, spent and then had left over within a specific period of time. To be cash flow positive you must have more money coming in than going out.
If you’re facing a money shortage and need to improve your cash flow quickly, try one of the following tips.
Do you have a good relationship with your vendors? Have you always paid them on time? If so, consider asking for an extension on your next payment.
If your current payment terms are set to net-30 ask for net-60. Be upfront with your vendors and tell them why you are asking for their help.
If your vendor is hesitant to negotiate new terms with you, offer something in return such as a slight price increase and a willingness to re-negotiate again within 6 months or so. Make a deal that favors you both and more importantly, one that you can make good on.
As long as you have a good relationship with your vendor, he or she will likely be willing to help you in crunch time.
Would a retainer or loyalty program work for your business? If so, get one started today!
For example, a masseuse with her own business needed to improve her cash flow, which varied greatly month-by-month.
In talking with her clients she found that most saw her services as a luxury and as such only came to see her on special occasions. In order to change that perception, she created a loyalty program where customers could buy two 60-minute massages for just $100 per month. This was a 30% discount, but made her services seem more affordable and less like a luxury. Her cash flow stabilized, and despite the discount, she still made more money each month from the higher number of customer visits.
If cash flow continues to be a concern for your business because of low seasonal sales or money that’s tied up in renovations or expansion projects, consider taking out a working capital loan or line of credit.
A working capital loan approved through ARF Financial can put money at your disposal within 7 to 10 business days.
Learn more about our working capital loan approval and payback process today.