Are you an SME business that wants to nail their cash flow goals for the coming few months? Here are 5 things that you must have in your to-do list – check them out:
1. Forecast your Cash Flow in Advance
Planning your payment for the next months and predicting how much you are going to spend and where will give you a better idea of budgeting. Ideally, your forecast should be for the next 12 months, where you list down all income and cost responsibilities, and also take into account variations, irregularities and changes caused by market conditions. Being prepared for what lies ahead will limit your exposure to potential financial difficulties.
2. Add a Bundle of Advantages
Bundle up services or products together, but make sure that you know the profit margins and ideal costs in advance.
- Bundle offers, special discounts and limited time services can perk up buying incentives for customers and reap in more cash flows for your business in the long run.
- Your goal should be to plan your cash flow in advance, and calculate how much profit you are going to make even after adding these discounts or bundle offers.
- Don’t sell anything at a loss just to market a coupon or a great offer.
- SME businesses should first make it a goal to breakeven and then move towards profit for a consistent cash flow.
3. Getting Repeat Customers
One of the best ways to encourage profit growth and a healthy cash flow is through repeat business. This means loyalty plans, special offers for frequent shoppers and incentive based products. Aim to offer low cost yet value added services that will get more people returning. This strategy will translate to more profits and a positive cash flow in the future.
4. Pulling Strings on Your Expenditure Wisely
There are some expenses that can’t be avoided; yet you can always find ways to creatively reduce payment and keep your cash ledgers healthy.
- See if you can bring in instalments instead of bulk payments for tax bills, utilities or supplies?
- Employee turnover also takes up a huge chunk of your cash flow – can you think of any ways to retain staff?
- Another issue most SMEs face is fraudulent clients and delays on payment – can you think of a strategy or system to cater to this?
5. Asking the Hard Questions First
Perhaps one of the foremost cash flow goals that every SME business in UK should be aiming for is preparing for the worst and asking the hard questions before any financial upheaval hits.
- How will the market be in the next few years and how can you grow the sales?
- Are there any seasonal ebbs and flows that you need to watch out for and how long would they last?
- What are your expectations with your cash flow with at least the next 2 years?
- What are you going to do if you run out of money?
- What is the appropriate amount that you MUST have in your account at all times?
These are all tough questions for an SME to answer especially when they are just revving up their journey ahead. But answering them can translate into better results without last minute panicking about the cash flow.