Why do we always look at Increasing Income?
One of the killers for any business is cash flow. If there is no cash flow, if all your profit is tied up in slow moving stock, your business is dead. Many people think that the only way out of this sort of situation is to increase the income of the business. However, an equally effective way of countering the problem of slow turnover could be to reduce costs.
Before spending anything ask whether you really need to buy it. As an example I use a firm called Viking Direct for all my stationery, packing, and printer needs. I know that they are reliable and they will deliver the after I place an order. This means that instead of stocking up on any of my consumables I can wait until I need them to buy them. This releases some pressure on my cash flow. It is called ‘just in time’ replenishment.
Other ways to relieve pressure on your cash flow include;
1. Barter. You will have many contacts from your business if it has been running for any length of time. Can you barter with them for anything you need? If you do not have any physical goods you may be able to use your knowledge as a barter item. You could share your lists and leads with others to increase both of your businesses without increasing your marketing costs.
2. Free Stuff. I know that it is nice to have a brand new software program that is all bells and whistles but do you need it? Look at the functionality you need, chances are that there is freeware out there that will do the job.
3. Buying. You probably sell on eBay why not buy on eBay? I am always amazed that people will spend loads on new office furniture and ignore some of the bargains on eBay.
4. Negotiate. “If you don’t ask you won’t be given” as my father used to say. Everything is negotiable, and if it isn’t go somewhere where it is.
5. Search. I like Viking Direct. They give me good service and the prices are a lot better than most places. However, if I find someone with the same level of service and lower prices will I stay with Viking Direct? What do you think?
Most importantly, plan ahead. The last thing you need is to run out of something and have to go to the high street to replace it. Just in time is a great philosophy but if you plan ahead are anticipating future needs and come across a good bargain then you are well placed to make savings. Just remember, that however cheap something is if it is going to be on your shelf for any length of time it is reducing your cash flow.
Be aware of the issue of cash flow before it becomes a problem and take steps to prevent it ever being a problem.
