Staying out of the red in this economy can be difficult. Many small business owners feel the pinch each month, barely making ends meet. Yet despite these troubled times, profit is possible! The key to ensuring a positive financial future is creating a plan. Instead of simply letting cash flow just happen, it should be actively monitored and managed. Here are a few tips for maintaining positive cash flow:
1. Create a Plan
While this tip sounds like common sense, many small business owners do not have a concrete financial plan in place. This plan can make or break your business. After running your business for a few months, look back through your records and look at your expenses. Learn how your business works and what things are vital to your survival. You need to create a roadmap- what you think will happen in the coming months. Look at your history and create a plan- the more detailed the better. The more you can predict what you will spend vs. what you can cut out, the more secure your financial future will be.
2. Manage Your Cost Structure
Fixed costs should be addressed every few months. What you need currently may not make sense in the future. For example- make sure that your salaried employees are vital to your business. We are not suggesting that you fire people; rather make sure the money spent is vital toward your business. Clearly part time or flexible employees are less expensive. Figure out what is best for your businesses bottom line. Also look at your rent and utilities cost. If you are experiencing a money crunch, talk to your landlord or utility company and see if they can help reduce payments for that month. Being proactive about your situation may help you reduce costs thus keeping you out of debt.
3. Work Together
If your business can help promote another business- do it. Working together with other small business can save costs as a whole. Try to create agreements promoting other businesses or directing your customers toward them to secure their services in lieu of payment. If your client needs a CPA- find CPAs in your area to whom you can refer your customers. In return, ask if the CPA can help you come tax season. Use social media sites such as Facebook and Twitter to promote your business, and other small businesses in the area. Helping the small business community as a whole will strengthen business around you, in turn strengthening yours.
Create a financial plan and consider your businesses bottom line. Utilize money saving tips that you use in your personal life in your business life. Saving money and making a profit is harder now than ever. However reaching out to other small businesses and working together can help strengthen the entire small business community! Learn other ways to manage your business HERE.