Three ways to avoid negative business cashflow.
At night, I can’t sleep. In the morning, I don’t want to wake up.
Urrghh can anyone else relate?
I literally used to have panic attacks in the middle of the night about cashflow in our business, which meant cashflow for our family too.
It is one of the most debilitating things you can experience.
But it doesn’t have to be this way.
So I’ve written out my thoughts on my TOP THREE TIPS for how to work on your cashflow crisis concerns.
TIP ONE – Go Lean or Go Home
Reduce expenditure everywhere you can. Ask your accountant or bookkeeper or business coach for ways you can reduce your monthly expenses even further. Chances are that you can’t see areas that could be reduced. But a different set of eyes could.
I make it a habit to do this every 3 months in any business I run. It’s just smart business to operate lean.
To do this, I go to my accounting software and print out the last 3 months of cashflow summary. This is basically where all my dollars exited the business, not in detail, but in summary. I.e. $4382 to Google Adwords, $491 in Bank fees etc.
You want to see the totals.
Then go through this report in detail, and try and work out which bits you could reduce. Sometimes you don’t realise how high certain expenses end up, and it helps you cut them back. It’s one of the first things I do when I work one to one with a new client, we go through this report together and I ALWAYS find them thousands (or in certain cases tens of thousands of dollars) they can save!
Be ruthless, or get someone you trust to help you be ruthless! Cut back baby!
TIP TWO – Increase your Revenues
Look for ways you can smartly increase your revenues.
With the current economic climate being so volatile, you need to broaden your product offerings right now. Offer more to the same clients. Find new clients. Find new geographic areas. Find new things to sell them. Increase your offering and turnover.
Sometimes an extra few grand a month in revenue can make a HUGE difference to your bottom line.
If you can’t see ways to do this, ask your clients what they want to buy from you. Stalk your competitors (especially in the USA who are more forward in ecommerce than we are in Australia). Get a good coach or strategist who can see things you can’t see to help you.
TIP THREE – Get eyes on your numbers.
Do you know where every single dollar of your money is going in and out?
If you use Xero accounting software properly, you should have clear eyes on numbers. You should look at your reports regularly. I am a BIG fan of Xero, firstly because it’s the only accounting software designed for Business Owners (the rest were designed for accountants and book keepers) and secondly because it’s part of a larger ecosystem of software platforms that all talk to each other to automate your business easily and cheaply.
If you don’t have access to your numbers, then you need to update your accounting system, or your bookkeeper.
You should have a number of reports on your desk every week. Every single week, without fail.
This includes your daily sales, by channel, every single day. I can help you with ways to automate this. It might come from your online sales platform, or perhaps other software or team members. But your eyes must be on your sales (and comparing targets vs actuals EVERY SINGLE DAY).
This definitely also includes profit and loss statements from Xero so you understand your breakeven point in your business, and do everything you can to ensure you get past breakeven every single month.