Business cash flow management is a crucial component of running a successful business. Proper money management allows your business to afford its running costs and set money aside for future growth.
However, feeling a little lost as a new business owner is only natural when you’re only just becoming familiar with earnings and outgoings. You may improve your current business cash flow management practices by heeding this advice:
Control Your Expenses
A business’s expenses should always fall within its earning potential. Otherwise, there’s a risk of operating beyond your means. This might mean that it’s best to explore fully furnished serviced offices during your early days in business when your earning potential is smaller.
If your earning potential grows and your space requirements with it, you may look at more expensive premises options in the future. Other ways to control expenses can include negotiating better deals on utilities, products, and services and cutting out non-necessities like newspaper subscriptions and expensive coffee.
Create a Budget
Just as you would use a budget to manage your personal spending, you can use one for your business. Create a detailed budget outlining income and expenses for a set period.
You may see the value in calculating a budget for one month and then comparing what you actually spent. A short-term budget may help you know where you’re overspending. You can then get back on track and improve your long-term profit potential.
Reduce Your Expenses
Spending can quickly become uncontrollable when you’re not actively monitoring it. After creating a budget and highlighting your most expensive outgoings, look at how you can reduce your expenses rather than just controlling them.
Staff, inventory, and workspace are undoubtedly among the most significant. You might consider outsourcing some jobs to virtual employees. Even clearing out some of your old stock at reduced prices can be helpful.
A change in premises may also be worth considering if it costs more than you can afford. For example, you might explore virtual or serviced offices when they can cost a mere fraction of a traditional office lease.
Invest in Tech
Productivity equals profit. The more your employees can achieve in their regular working hours, the lower your payroll costs can be. Consider investing in tech to automate tasks that may have otherwise taken your team a long time to achieve.
For example, you might automate accounting tasks with accounting software and improve business efficiency with customer relationship management software.
Negotiate with Suppliers
What you’re currently spending for goods, services, and materials may not be your suppliers’ best prices. Take the time to review your expenditure and meet with suppliers to negotiate better terms.
If they say no, you’re free to review other suppliers and see if someone can offer the same high-quality goods at a reduced rate.
Encourage Cost-Saving Ideas
It doesn’t have to be your job alone to come up with cash flow management ideas. Your team can also contribute to the discussion. In fact, you may consider incentivizing a cost-conscious culture. If your team is rewarded for devising ways to save your business money, they may be more likely to practice money-savings in their everyday work.
There may come a time when you realize your business cash flow needs some fine-tuning. When that time comes, you have many options for how you do it. Negotiating with suppliers, controlling and reducing your expenses, and even changing your business premises are just a few of the many options worth exploring.
