We’ve all heard the saying: cash is king. This can be especially true when it comes to small business. In many small businesses, properly managing your cash flow may be even more important than profitability.
Here are some of our top tips of 2015 for managing cash flow to help boost your bottom line in 2016.
To help run your business effectively, you should have a solid cash flow model. One mistake many small-business owners can make is to forecast cash flow too optimistically. Be sure to take into account all the possible pitfalls that can happen. Be prepared for all types of surprises that can happen, like employees quitting, customers paying late or deals falling flat. Have a cash flow model so you're not scrambling to deal with surprises. One of the best ways to counteract worst-case scenarios may be to develop strong strategies to deal with them.
Raise money when you don’t need it.
Set your business on a path of smart growth, not just fast growth. Having cash reserves can allow your small business to grow while preserving profits. Not only can this help alleviate some money worries; it may help boost the appearance of your company. Taking on funding may also help validate your company, form partnerships and attract new talent.
Manage payment schedules.
Stay on top of your cash in and cash out. Along with seeing how quickly you can get money in the door, consider how you can slow money going out. Without alienating your suppliers, find an optimal payment schedule for you.
Be flexible when finding solutions.
It’s almost inevitable that you’ll face a cash flow crunch at some point during your business; this is typically a part of a growing business. Don't let money burdens get the best of you. Look for creative solutions. Allow for these challenges to motivate you to build a long-term successful business.