Cash flow is king in any business. Minus it, the enterprise growth would be stunted, and fold-up might be inevitable. For these reasons and more, the importance of proactive and strategic management of cash flow to a business entity cannot be over emphasised.
So how then can business owners surmount the challenge of no or insufficient cash flow?
Cultivate saving habit
Money well kept invites more money. Cultivating a saving habit helps you as a business person to maintain a healthy cash flow. Learn to economise, reduce cost, prioritise on your expenditures and remember, money deserves respect.
Expend resources on only the things that are necessary; the things you need rather than the ones you want. That would surely lend a hand in ensuring that your income is robust over your outflow.
Budget
Never spend money in an unorganised manner; rather let all your spending be able to answer the question ‘why’ satisfactorily; that is, be clear on why you have to spend any money per time. You should also endeavour to do the right amount of spending at the right time; yes, there is a time to it too.
It is easy to encapsulate all of this in a budget, which is described as summary of proposed spending juxtaposed with plans to finance it.
Pay all money into the bank
Experience has been said to be the best teacher. After struggling with cash flow during the early days of our business, I then decided that every money that comes in as income MUST first go to the bank.
Prior to that awakening I couldn’t resist the temptation of seeing every money that comes in from sales as ‘my money,’ and was spending same both for business and even personal reasons almost as fast as it came in. Before long we started experiencing cash crunch.
The singular decision to ensure all money receivable or received is paid to the bank increased our cash flow by at least 50 per cent.
More investment
Nothing increases money at hand like more money. To increase your cash flow you may wish to deepen investment in your current business or diversify. For instance, an entrepreneur who is into hospitality business having a 20 room guest house got land in another location and built up another 20 room guest house; the cash flow of that business increased by at least 100 per cent.
A publisher in the media business also decided to venture into an entirely new field by starting a farm; he became successful and money starts to roll in. He would always congratulate himself anytime he sees the balance sheet.
Let your account be managed professionally
One thing that could hurt your financial performance is not having a well integrated account department manned by professionals who are on top their game. Every statutory record must be well kept.
Moreover, you as the boss must closely scrutinise the records regularly to know the temperature of your cash flow. It is also wise to seek for and utilise potentially productive ideas from your account staff.
Grow your sales
More sales, more inflow. Make concrete efforts to increase your sales or turnover. Set achievable sales growth target and run with it. You may need to improve your structures; use professionals when necessary -marketing, advertising or sales expert.
It would also help to have a dedicated sales or marketing team; evolve strategies, study your competitors; offer something special to the market place and drive hard. With these in place and all other things being equal, before long you see all your curves shooting up and your bank manger would smile more at your appearance. I’m sure you know why.
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