The Seven Steps To Improving Cash Flow in BusinessIan McManus
Step 1 – Build Your Business Vision Every business owner must have a vision for his business be it large or small. A vision is there to inspire and motivate, it’s like an ultimate goal – the pinnacle of your business success.
When you build your own business vision, make it clear, direct, to the point and specific to your business. There’s no one vision that works for every business, you need to tailor your ultimate goal according to your business expectations and needs.
Make it loud. Have it written in bold, large letters. Post it where everyone can see it as it’s vital for every employee of the business to know the direction of the company and what their goal is.
Step 2 – Define Business Divisions and Set Responsibilities
Construct an Organizational Chart
When you construct an organizational chart don’t make it too complicated. Keep it simple as a chart that’s too complicated will only get confusing.
- Define Responsibilities
Each department and section within a company or business must have defined roles in order to generate a positive outcome for the business.
This rule applies to everyone within each department. Be exact in allocating job roles and make sure that all of your team members are aware of their responsibilities. This will benefit everyone within the organization: the workers, the managers, and ultimately you!
- Heading in One Direction
It’s vital that you and all the people that make up your organization know what goal you are heading to. Heading in one direction promotes unity within a system and improves the chances of success.
Unity is not always easy to achieve. Apathy, ignorance, and sometimes malice among your workers are negative attitudes that can fester and spread. It’s important to identify these people. It’s also important to discover why they feels this way and to take immediate action.
Start with a soft approach: talk to them. It’s surprising what you will achieve by having a heart to heart talk with the staff member involved. Sometimes it’s just a matter of educating them about your expectations, and with everyone shooting for the same goal, your business will be a truly amazing company to lead and/or work for.
Step 3 – Receivables – Collect What Is Yours
The quicker you get paid the better. Why not collect payment in advance? Or at least collect right after delivery or completion.
Don’t wait for your “uncollectables” to pile up thereby creating negative cash flow in business.
Step 4 – Keep Your Stock Under Control
Too little stock will cause interruptions in operation. On the other hand too much stock will cost you the price of holding and storing it. A careful balance is important.
Be careful about the expiry dates of your goods. If you accidentally sell even one expired item, you could be heading for trouble.
Establish a system which sells aged (near expiry) items first as you can still make a profit from them.
Step 5 – Cut Costs and Reduce Expenses
In other words, save more and spend less. This practical yet simple tactic is applicable to all businesses.
Step 6 – Learn How to Charge More
Don’t undervalue your business. Increase your rates!
But learn the strategies first as you don’t want to price yourself out of the market.
Step 7 – Learn How to Collect Your Money Faster
- Offer credit terms
- Collecting a full or partial payment in advance
- Cash on Delivery or Upon Completion
The longer you keep your fees uncollected, the less likely you’ll ever get them at all.