How You Can Save Money and Improve Cash Flow As A Small Business

The number one reason most small businesses fail is due to cash flow issues. With over 50% of small businesses closing within the first five years of trading, this isn’t a minor issue, far from it.

 

Sadly, you cannot always control your cash flow; maybe you have a bad debtor, or clients are late on their invoices, or you have unexpected expenses. If your small business is heading towards a problem with its cash flow, then looking at how you can maximize your funds can help you avoid major disasters and implement ways to preserve funds.

 

Ask for upfront payment

 

In the early days, especially, it can be beneficial to request payment upfront from clients to remove the risk of non-payment, Either part or in full; this can help you have some cash coming into the company while the work is being done.

 

Legitimate clients will only be too happy to accommodate this request. At the same time, some people might be hesitant to pay in total upfront. Especially if this is your first time working together, offering discounts, putting the money into an escrow account or splitting the bill into smaller payments as work is done can help reduce the risk on both sides.

 

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Move toward a paperless system

 

Did you know that for every $1 spent on printing, $6 is spent on distribution? Going digital and removing physical paperwork and filing systems from your business can save you money, time and space, thus further cutting costs and helping to budget your money more efficiently.

 

It’s not just paper you save on; you can eliminate the need for stationery, cabin tents, printers, ink, and so much more.

 

Become self sufficient

 

The more you can do yourself, the less you need to pay out to do. It pays to teach yourself some new skills when running a small business. Especially smaller jobs that you can easily pick up.

 

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Of course, your time and skills aren’t never-ending, so try not to bite off more than you can chew, but learning new skills and teaching yourself how to do different things can help you to save money without cutting corners.

 

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Automate every routine business task

 

Automation in business has been around for a long time now. However, more tools are coming to the market that can help you automate parts of your business, thus freeing up your time and focusing your energy on other areas, such as bringing in new business.

 

Look for applications that can improve workflows and are beneficial to your niche for maximum impact.

 

At a minimum, you should be automating;

 

• Customer Service
• Engagement
• Leads
• Sales
• Social Media
• Emails

 

While money-saving tactics can vary from one business to the next, it is worth looking at your business to see how you can save money and improve your cash flow and avoid becoming one of the 82% of small businesses that fail due to cash flow issues.

Good luck!

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

(email) ken@stltest.net

(website and blog) https://www.accountingaccidentally.com/