Creative Cash Flow for Struggling Businesses
Even in the midst of a healthy balance sheet, an influx of new clients, and dozens of sent invoices, poor cash flow can still kill. Entrepreneurs need creative cash flow strategies to help manage their risks and remain strong even during unexpected changes.
As any business owner is well aware, cash can make or break your business almost overnight. The recent COVID-19 pandemic has forced many entrepreneurs to face this challenge head on. There is no doubt that if you have ever faced this challenge, you’re always looking for ways to keep cash coming in, sometimes at the expense of your focus and brand.
Here are a few creative cash flow strategies that you can implement without sacrificing what made your business great to begin with:
- Share Knowledge. If you own a business, there is something you’re an expert in. Maybe the service you provide is the expertise you have. Perhaps you built your company with intriguing marketing campaigns or financial savvy. No matter what it is – you know it, and people need it. Take that knowledge and provide some part-time consulting to others in a similar space or field. Use Zoom and consult with people across the country who would never compete with you anyway. Charge a good rate for this service and immediately see some income into the business with no cost but your time.
- Repurpose existing products and services. If you’re the content business, you already know this time-saving strategy all too well – take your existing content from an email and turn it into 2-3 Facebook posts, turn your blog into a short video, and reuse that picture with a new filter and some text features. Repurposing or repackaging your product or service can result in new revenue streams, sales funnels, and even value propositions almost instantly. Slow days at the restaurant? Start offering event space for off-site office meetings or sell off your ingredients and products at cost before they spoil. Retail not flying off the shelves? Launch flash sales – even if you lose money on some items to avoid the risk of higher losses or Facebook Live auction particular pieces to drum up attention AND cash. One company I was a part of had an IT professional that wasn’t really needed for full-time work. They began to hire him out for small jobs part time, covering the cost of his employment while also ensuring their company was taken care of.
- Evaluate Expenses. Where is money leaving your account, that isn’t also providing value for your customers? I sometimes find that I have a recurring software subscription that I thought would be useful for my client base. When it turned out to be a flop, I had still forgotten to cancel it and racked up charges for a few months. Don’t be like me – be quick to cancel. The pandemic may also be forcing you to realize what’s important – perhaps your company doesn’t actually need the office space. Or maybe you’re seeing just how big of a draw on your account it really is, even if you do need it most of the time. Consider subletting or renting out your conference room to recoup some of your costs (see point 2).
- Raise Prices. Every entrepreneur fears raising prices for risk of losing customers. However, there are times you have no choice, and times where it makes the most sense. If you are a restaurateur – would a $1 increase on half of your products actually cause people to stop coming in? For many of you, the answer is likely no. Similarly, if customers really believe in the value of your service, a 5-10% increase in cost for valid reasoning is not going to break their bank (in most cases). I had to raise some prices last year, I dreaded talking to my customers about the increase. I sent an email explaining the increase and why it needed to occur. Most were very understanding, and I didn’t lose a single client.
- Change your payment process. One of the quickest and easiest changes I made early on in my business was for invoicing. I started out at NET30, like most businesses do. I found that clients hardly noticed the change to NET15. I also started invoicing every two weeks for clients who used hourly services, resulting in lower invoices that didn’t seem as painful to pay off. Some clients even stopped being late in payments altogether. For retail and product businesses, this isn’t always possible. However, you might consider other changes, such as your credit card processing and POS system that could save you money every transaction. Include a tip system that politely suggests higher tips that no one will question. For instance, have you ever noticed on DoorDash that the middle tip pricing is the default selection? If it started at the low price, I would likely stick with the low price, but instead I never question its tip value suggestion.
Being creative on pricing and financials is the easiest innovation you can bring to your business that might have immediate cash flow implications, and bigger long-term gains. Don’t stick to “the way we’ve always done it” and start determining how you can improve your margins and bring money to your account quicker on a daily basis. These small changes can mean the difference between closing, just surviving or really thriving.
Let Catalyst help you.