Cash flow is the blood of your business, and it’s what keeps you afloat. That is why how you manage your incoming and outgoing funds matters just as much as how much you make. If you are a small business owner looking to improve your balance sheets, keep reading for tips and advice from the Avaii Wealth Management blog.
Choose the right financial institution.
Don’t trust just any financial institution for your business bank account, and be sure to do your research before committing to a certain account. The ideal account should help you achieve your business goals more quickly.
Sell excess inventory.
Your business will grow and expand throughout its lifetime. This means that you may find yourself no longer utilizing equipment or inventory that once earned a profit. Instead of paying for these items to sit in storage and collect dust, sell them. Consider selling heavily discounting storefront items online or liquidating surplus inventory in bulk to offload a high volume of product quickly.
Require a deposit for large orders.
Many businesses, including construction firms, require a deposit for large projects. This is a common practice that has many benefits for your business. Not only does this put value on your time, but requiring a non-refundable deposit is one of the best ways to ensure that your client is serious about making a costly purchase. It will further help cover out-of-pocket expenses. If a deal goes bad, you will not be in the red for raw materials left unused.
Bundling products and services is an excellent way to increase sales and provide convenience for your customers. To get started bundling, take a look at Amazon’s rules regarding product bundling. The seller marketplace requires that items be highly complementary and titled clearly so that buyers understand what they are getting — sound advice for your business, as well. Bundling is a valuable tool to help you save money as it reduces shipping and handling costs, and you can also usually negotiate a discount from your vendors on frequently sold items.
Buy used equipment.
One of the biggest expenses that many businesses incur, especially at startup, is equipment. But you can save a significant chunk by buying used. This applies to everything from heavy machinery and vehicles to cameras and copying machines. With few exceptions, buying used is a more financially sound choice than buying new.
Bartering is one of the oldest commerce methods in the world. Ancient civilizations used to trade things like animal pelts and spices to one another in lieu of gold or precious gems. And as Business Know-How explains, bartering makes sense for small businesses, if done for essential services that you were going to buy anyway.
Perhaps the most impactful thing you can do to ensure a positive cash flow is to hire the right employees from the beginning. Keep in mind that you may pay more for top talent, but also, happy and well-utilized employees are less likely to leave. This can reduce your turnover ratio and save you money in hiring and training.
Your business’s profitability is not determined merely by the money you make. To enjoy a healthy cash flow, you must also spend wisely. This means different things to different businesses. However, the tips above — including choosing your financial partners carefully, bartering, and buying used — are universally beneficial and can help you establish a buffer for when sales are down.
Avaii Wealth Management puts clients first. Whether you want to retire in style or leave a legacy for your children and grandchildren, Avaii’s services are here help you meet or exceed your wealth planning goals.
This content is developed from sources believed to be providing accurate information. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Image via Pexels.