Ask any business owner what their #1 issue is and they’ll almost always tell you cash flow.
Whether you’re running a company of 1, experiencing hyper growth or managing an existing business with hundreds of employees, cash flow management is always top of mind.
Granted, as your company grows and matures cash flow conversations tend to be more efficiency based; however, the sad reality is that many business owners never get to that point.
Instead they end up having the “how do we make (insert expense here) this month” conversation time and time again.
Many potentially great businesses have died on whiteboards and in boardrooms across North America because they were either under capitalized from the outset or financially mismanaged during their tenuous existence. The remains (employees, equipment, intellectual property etc) to be picked over by their competitors with stronger cash flow management.
Here’s 3 ways to boost your businesses cash flow:
CAPTURE MORE OF THE VALUE CHAIN
I suspect that stores like BestBuy make more money selling all the things that go with a TV than the flat screen itself…think about it… $30 for an HDMI cable….really? It’s brilliant marketing as everyone focuses on getting the best price on the TV but dish out and arm and a leg to plug it in.
WestJet found out that people that fly often like to pick where they sit on a plane and that they could charge a $20-$30 fee for that privilege. It’s all bonus revenue.
I once heard a story about an individual who ran a lumber mill in BC and when times got tough the mill decided to sell the wood chips and sawdust instead of just disposing of it. Today apparently that’s standard practice as many mills count on revenues from selling wood chips and sawdust.
RENEGOTIATE EXISTING COMMITMENTS
Whatever your business, you likely have a set group of suppliers you work with.
Can you negotiate better terms and rates if you send them more business?
Are there other comparable suppliers in the market anxious to work with you?
Are there budgets your suppliers have for marketing/cross promoting your business that you haven’t tapped into yet?
COLLECT PAYMENTS IN ADVANCE
If you’re selling a product or service, chances are you
can incentivize your clients to prepay for future services today.
LinkedIn offers a 20% discount if you buy a full year membership upfront.
Legal and accounting firms take retainers upfront for services they will provide you in the future and automotive shops pre-sell maintenance packages.
What’s your bread and butter product/service? What kind of incentives can you offer to encourage your clients to buy more or sooner?
What kind of a difference would it make in your business if even 10% of your clients took you up on your offer?
Marcin has been instrumental in building several businesses including commercial & multi family real estate investment partnerships, a consulting practice and a smart home security business serving customers nationwide. Marcin has secured over $100MM in growth capital for various businesses and has collectively spoken in front of thousands of entrepreneurs, business owners, investors and those just starting to explore living life on their own terms. Outside the office Marcin can be found at the gym lifting heavy things, skiing or on the road zipping along on an extended bicycle ride.
*** Please like or share this article if you found it valuable ***
The information contained herein is for general guidance on matters of interest only. This information contained herein are not intended to provide you with any advice on financial planning, investment, insurance, legal, accounting, tax or similar matters and should not be relied upon for such purposes. www.MarcinDrozdz.com is not a financial or tax adviser. You should assess whether you require such advisers and additional information and, where appropriate, seek independent professional advice. www.MarcinDrozdz.com, its subsidiaries and affiliates, are not responsible in any manner for direct, indirect, special or consequential damages however caused arising from your use of the information contained herein.