Cash flow is what keeps a lot of small business owners up at night, and there are no simple answers on how to make it better. But there are things you can do, short of simply hoping for a sales includes, that could help you cope.
Here are some tips from three small business experts:
“Barter some of the things you need for your business,” said Barbara Weltman, New York-based attorney and author of J.K. Lasser’s Tax Deductions for Small Business. “This has become very popular as of late and it is a great thing.
“You don’t have to use cash for the things you need, but you still have to report the transactions for tax purposes. For example, if a dentist needs his office painted, he could offer free dental work for the painter.”
2. Step Back and Evaluate
“Many small business owners set up their business do things a certain way and keep doing things that way,” said Denise O’Berry, Tampa, Fla.-based small business expert and author of Small Business Cash Flow. “It is important to take a step back and look at what your expected outcome is. Look at the business processes along the way and see where there are possibilities to make efficiencies.
“For example, if you were going to look at your sales fulfillment process, look at every single stop in the process and at every single touch point and ask yourself why, if there is a better way and if the step needs to be done. Ask yourself if each step adds value to the overall process.”
3. Pair Up
“Partner with complementary businesses,” said O’Berry. “I see this with small retail centers. If there is a gym and salon next to each other, they might come together to promote each other’s products or services.
“Create advertising pools and marketing pools to get the information out to the customers they have in common. So many small business owners think they have to go it alone. They don’t."
4. Establish effective inventory practices
“ Make sure your inventory practices are more ‘just in time’ than ‘just in case,’” said John Blasingame, Florence, Ala.-based president of Small Business Network and host of the Small Business Advocate radio show. “Make sure you are managing your inventory practices very closely so that when something comes in, it doesn’t sit on your shelf for a while.
“When inventory is on the shelf, it stands to be broken or obsolete and you have to store it. That is a cash drain.”
“Have a good inventory tracking system,” O’Berry said. “Find the optimum number of items for inventory so that it is turning over often enough that it is not collecting dust and taking up space.
“Look at packaging what you offer,” said O’Berry. “Package your products together, or if you are a consultant, package your articles and put them into a book. Have the price be a little less than what those things would be individually.”
“Outsource the one-off stuff you need,” O’Berry said. “Outsource a virtual assistant. There are tons that will help you and specialize in anything.
“They do the work, you pay them and then they are gone. It is a really good solution for small business owners.”