Everyone knows I beat the profit drum: "Profit first" is still (and probably always will be) my motto. But running a business is complicated. There's more to being an entrepreneur than a balance sheet that shows a profit. So many of us end up looking for cash-flow solutions because it's not just about how much revenue comes into a company—it's also about when that revenue comes in.
Keeping sufficient cash flow is very important, and making sure funds are available when you need them is critical to running a healthy, profitable business. Here are some of my tried and tested cash-flow solutions.
1. Balance B2B and B2C business.
B2B clients can be a rich source of steady revenue, but they don't typically like to pay immediately. When you invoice a business, your invoice goes into a stack with all the others. Businesses are likely to insist on longer payment terms, which can slow down the process of getting paid.
B2C clients are far more likely to pay when services are rendered or products delivered. You get your money up front without having to send invoices and reminders.
I love all my B2B and B2C clients, and I believe it's ideal to have a balance of both. This way some money comes in right away and some trickles in. One of the cash-flow solutions I recommend is spreading your work out evenly among businesses and individuals.
2. Focus on your lean times.
You may be in one of the rare industries that sees steady sales all year long, but for most of us, we have seasonal ebbs and flows. Catering businesses may boom in wedding season and for holiday parties. Accountants and tax preparers are slammed in March and April.
When you're looking for ways to avoid a dry spell in revenue, consider finding ways to boost business in your off season. What I try to do is find some way to make myself valuable to my clients, even in the slow times. If you're a caterer, perhaps you could approach some professional associations and pitch your services for events in the fall when business is slower. A tax preparer could offer seminars in the summer time to help individuals prepare to minimize tax liability.
3. Pay attention to billing cycles.
One of the simplest ways to regulate your cash flow is to stagger your billing dates to clients.
Gone are the olden days when paper statements all had to be sent out on the first of each month. I like to space out my B2B billings and schedule them over the course of each month, which means that money comes in steadily the following month.
4. Pay attention to your outgoing expenses.
Just as you can adjust billing dates for your clients, try taking the time to spread your monthly payments out so they're not all due at once. Regulating how money goes out can be one of your go-to cash-flow solutions.
5. Start a subscription box.
There's a reason subscription boxes are everywhere you look: They bring in revenue, and they can do so regularly!
Consider finding some cool way to package your products and sell them over and over. Whether it's new flavors of ice cream or exclusive craft beers that are only available to subscribers, there's a way to put together a subscription service for your business.
You'll not only have your creativity challenged—you may be able to bring in new dollars every month.
6. Look for passive income opportunities.
I'm a big believer in making money while you sleep, and passive income does just that.
ATMs in retail stores take up little space and can earn their keep. Ads on web pages can bring in dollars with no effort on your part. And once you've written a book, it keeps on earning you money.
Exploring ways to bring in revenue without constant active work can supplement your everyday labor. There's no reason not to explore passive income generators, because they can be a lifesaving cash-flow solution.
We're all working hard to bring in revenue, manage expenses and grow profitable companies. From time to time, we all struggle with not only making sure we have enough cash coming in, but also making sure it's coming in at the right time. Taking a few steps to refine your cash flow can make a difference.
Read more articles on cash flow.