There are so many things to consider when starting a business, but ensuring a steady cash flow is one of the most vital ones. Branding, handling staff, having a vibrant online presence are all great, but if there’s no actual cash coming in and going out, your business won’t be around for long. Here are some simple ways to handle this.
Add Value
Evaluate what else you can offer clients apart from the main goods/ services. For example if selling a machine, offer to include maintenance in the package. This entices clients to make a purchase since you’re eliminating the inconvenience of looking for a maintenance provider. In addition, adding value allows you to raise your price point.
‘Hook’ Your Clients
Having repeat customers is one of the surest ways of maintaining cash flow. To do this, you must treat your customers well. Offer sweet deals such as VIP offers, loyalty programs, freebies and other frequent-shopper programs. When throwing in a freebie, make sure you find a way of covering the cost so that you don’t make losses.
Tough Rules
One of the top reasons why businesses experience cash flow problems is late payments. Have a strict time frame and set rules as to when a payment must be made, and when it is classified as late payment.
Understand Your Expenses
Offering discounts is a good strategy to attract customers. However, you need to factor in your costs as you do this. Otherwise you’ll end up incurring losses. The critical costs to consider include: how much you should ideally charge, overall cost basis (what you paid for something), the cost of your offer and the profit margins on your product or service.
Safety Cushion
Life doesn’t always go as planned. Calculate how much outgoing expenses you incur each month. Work to ensure you always have this amount in your account such that you’ll always manage to make your payments even in case of overdue payments.
Back-end Product/ Service
In case your initial offer won’t make you profits, add a back-end product/ service. For instance, free drinks for the first hour, then charge a higher price for the hours after that.
