It is always a big concern when your small business bank account is running low.
Maybe you have scaling up and have higher costs due to growth or just going through a quiet period.
A Negative cash flow can take a significant toll on the financial health of your business but it doesn’t have to be the end.
What it does mean is that you need to have a serious review, create an action plan and take steps to ensure that your bank bounces back.
1 – Review your pricing structure.
Difficult financial times are a sign that it is worth reconsidering your pricing structure and making some changes. It is possible that you are undervaluing your services and selling yourself short.
- Take time to consider that value you provide
- Research your competitors rates
- Calculate your costs
It is easy to charge the new customers your new rates but it is always a difficult conversation to have with existing customers. Decide whether to increase gradually or bite the bullet and have those conversations with them, give them plenty of time and show your value.
2 – Subscription Cull!
Over time, software subscriptions mount up and many business owners continue paying for software that they’ve ceased to use. Make a list of your subscriptions and only carry on paying for the ones which truly deliver value to your business. You’ll be surprised how much money this simple step can save you, especially over the course of several months.
3 – Reduce your wage.
This is not ideal I know. However for a short term cashflow fix as the business owners temporarily taking a lower wage can help smooth things over. You deserve and need to be paid and take money home but this short term fix might give you the boost you need.
4 – Go Green
Gas and electricity are so often one of the largest costs for a small business. Going green and cutting your energy usage can really help to save money. You can installing energy saving bulbs, insulating blind and similar options can really help to cut costs.
5 – Reduce your payment terms
Many businesses allow their customers or clients up to 90 days to pay invoices, but if your funds are dwindling, it’s time to reduce this window. Cash flow is just as important as profit to the survival of your business and if you run out of available funds now, getting paid in two or three months’ time won’t help you much. Consider shortening your deadlines to 30 days or less to improve your cash flow and create a more continuous stream of funds.
6 – Diversify!
Don’t put all your eggs in one basket 😊
Loyal customers are fantastic but being reliant on a small number of customers can mean you put your business at risk. Increase your customer base where you can as well as creating other streams of income will really have a great impact.
A dwindling bank balance isn’t always the end so long as you take action.
Implement the above steps and improve your bank balance and the profitability and cashflow for the future.
If you need support then get in touch and we can help.
Get ahead, get it done.
Get in touch if you would like support with completing your tax return.
Ask me for my FREE 22/23 Tax Return Checklist
Thank you for reading this weeks blog – 6 Steps to Take If Your Small Business Is Running Out Of Money
Flo