For small business owners, few things are as important as having the ability to maintain a steady cash flow. Once cash flow becomes an irresolvable chokepoint, even firms with the most innovative products and the most passionate team members will inevitably fail. While there is no way to prevent against the circumstances that can lead to circumscribed or even negative cash flow, there are things you can do to lower their risk factor.
Limit your expenses
While this bit of advice may seem obvious, excess operating costs have waylaid many brilliant companies over the years. As this Entrepreneur article explains, small business owners need to be constantly reevaluating their agreements with suppliers to make sure that they’re getting the best value possible. You should also be looking for low-cost digital solutions to any and all recurring operational tasks, consulting with CPAs to continually lower your tax burden and renting equipment whenever possible to avoid problems related to obsolescence and wear and tear.
Prepare for your off-season
Whether your business is in ice cream, mobile apps or farming equipment, your company experiences an off-season wherein your sales fall off due to various factors having to do with the industry in which you operate. By combining the wealth of information that is made available to the public by the internet and your sales patterns, you should be able to predict when your off-season occurs, and to a certain extent, it’s severity. With this information, you’ll be able to avoid making potentially devastating mistakes regarding the acquisition of new equipment, property or employees.
The importance of no
This Inc. article includes some useful financial tips for small business owners, but the most valuable is the importance of knowing when to say no. If you’re approached with a highly lucrative project that your company obviously doesn’t have the resources or experience to handle properly, don’t accept that project. While it’s difficult to walk away from what could potentially be a significant payday, your company’s inability to deliver the project on time, on budget or at all will waste resources and damage its reputation. As such, leaders need an in-depth quantitative analysis of projects that will strain your capabilities to determine whether or not the juice is worth the squeeze.
This article was written by Mario McKellop for Small Business Pulse