May 5, 2009
When you have tight cash flow focus on these 6 areas: 1. Poor Sales - Check the effectiveness of your sales staff. What is their close ratio? If it is low, then it may be one of the following: you have the wrong people on board, your sales staff needs more training or you pricing is not competitive. Ultimately, you need to know the answer so that you may hire new sales people, schedule additional training or re-examine your pricing strategies. 2. Expenses - Who is responsible for watching the expenses? Net profit is the source of growth capital and is highly dependent upon your ability to control expenses. As Ben Franklin said, "Every penny saved is a penny earned." You and your staff should take a close look at your expenses to find ways to save money. 3. Create Incentives for Faster Payment- Small businesses can cut the time spent waiting for payment by offering a discount for quick payment. Offering discounts of 1% to 2% for payment within 10 days, or any other incentives appropriate for your industry, can really help cash flow. 4. Consider Using Barter Instead of Cash- You can reduce the strain on your immediate cash if you trade necessary goods or services. 5. Trim Your Inventory- If you cannot implement a "just-in-time" inventory management system like many larger manufacturers, try "just-in-less-time." Money spent on inventory is money that is not able to produce any interest or savings for you. 6. Consider Consolidating Your Loans- If you also have several loans, review the rates and terms on each one. You may be able to consolidate two or more loans into a lower-interest account and improve cash flow. To learn more about how to manage your business cash flow, contact Tim Ledvina at (352) 334-7105 ext. 323. You can also check out the Chamber's five online Money courses as part of SmallBizU at www.gainesvillechamber.com. Click on “Chamber Services,” "SmallBizU." If you need additional information regarding employee training or available grants, contact Florida Works at (352) 334-7105 ext. 311.