by Sharon Jones
As a business owner, you’ll be aware of just how companies fail to make it to the five-year mark. What you might not be aware of is why they don’t get to celebrate their fifth birthday. It’s not because the business is inherently flawed; in many cases, the signs are optimistic, there’s a demand for what they’re doing, and so on. The issue is that it can cost a lot to run a company, and sometimes while there are plenty of incomings, outgoings are just too high. Cash-flow problems follow, and suddenly they can’t pay their bills, and sooner rather than later, it all comes to a head. It’s game over.
As such, one of the best -- actually underrated -- things you can do as a business owner is to make sure that your cash-flow is in a healthy state. How do you do this? We take a look at a few methods below.
Cash issues rarely just materialize overnight -- it’s been a slow and steady fall into difficult conditions. As such, your first line of defense will be to actively monitor what’s going on with your money situation. If things aren’t going well financially, then you want to catch the problem as soon as possible so that you have time to do something about it. It’s when the problem is allowed to develop that the longevity of the company is at risk.
Releasing Your Funds
One of the more annoying aspects of maintaining your cash-flow is this: on paper, everything looks good. It’s just that you don’t have money in your account, because you’re waiting for your invoices to be paid. If you find that you’re routinely entering financial difficulties because someone isn’t paying the money that they owe you, then there are things you can do. You can try to nudge them to pay earlier by offering a discount for early payment, or you can look at accounts receivable loans. The latter option is essentially an advance on the money that you know would be coming your way eventually, you just don’t know when.
In order to work at your brilliant best, you’re going to need to have the right infrastructure. Alas, this can be expensive. It’s not cheap to buy all those heavy pieces of machinery. But who says that you need to buy them in the first place? It’s nearly always possible to rent rather than own. Now, taking this method does mean that you’re not adding to your list of assets, but it does come with a clear advantage -- it’s cheaper, and you’ll be able to spread the cost over the lifetime of the rental period, rather than splash a huge chunk of cash all in one go.
Where To Cut Costs
Finally, from time to time it’s always a good idea to see where you can cut costs. Bills can build up steadily over time, but some of what you’re paying for may no longer be necessary. Cut them out, and put more money in your company’s bank account.