Some of the factors affecting businesses in 2016 are economic downturns and interest rate increases. Although these factors will impact on SMEs, this doesn’t necessarily mean that they can’t grow. After all, when a business is reduced to its most basic form, it’s all about managing your cash flow which is the money coming in and flowing out of your business. Managing your cash flow can benefit your business greatly.
Below are 10 tips on how you can achieve this:
Make sure products or services are based on customer needs. Stock should be sold as quickly as possible, so cash comes in as fast.
When times get tough, market hard. By opening a new sales channel via the Internet, offering special discounts, an e-mail newsletter or website is also great for encouraging foot traffic in-store which could also increase sales from existing customers.
Ensure that employees know about product benefits. If customers are well informed, interest can be turned into sales.
Introduce an incentive programme. Creating sales targets and linking them to personal inputs that are rewarded can keep sales ticking over in difficult times.
Constantly review your costs. Find ways of reducing costs by making early payments to suppliers who offer discounts for payments made in less than 30 days.
Determine what sells well and what doesn’t. Reduce stocks of slow-selling items and buy good sellers in bulk. That way, you could benefit from bulk discounts and increase your margins.
Pay carefully. It’s considered wise to pay employees first and suppliers next. Also regularly review when you expect to receive money and pay it out.
Keep up with customer payments. Knowing when your customers pay or when they fall behind will allow you to take quick action to get money in.
Ask for deposits and then order the goods required. You can put the money to good use while you fulfil the order.
Examine your supplier and customer credit terms. As an example, it’s not recommended to pay suppliers in 30 days and then offer customers 90 days’ credit.
The one advantage that entrepreneurs have is that they are passionate about their businesses, no matter the economic situation. Along with this, careful planning and financial discipline will see your business grow and move successfully into more prosperous times.
For more helpful information on how to start, grow and manage tour business, visit our BizConnect website.