Running a business means there’s an ebb and flow to income. Your goal, however, is to have more flow than ebb. Here are tips for injecting more cash flow into your business.
1) Cut costs – The less you spend, the more you save. Cutting your business costs is one of the quickest ways to boost cash flow. Review your budget and find areas where you can save money. Just like personal budgets, business budgets often have small expenses that may not be necessary. Look for ways to reduce service costs. For instance, do you really need all the extra features on your phone plan, or can you manage with a cheaper option? Bundling services like Internet and phone can also help you save money.
2) Have a payment policy – Before taking on a new client, have a policy on how and when you’re paid. Your policy should include areas such as deposits, time frame for payment (i.e. 30 days), and penalties for late payment. This helps insure people pay on time.
3) Follow-up on accounts receivable – If you don’t follow up on outstanding invoices, you’re leaving money on the table. Along with your payment policy (#3), develop a system for tracking, re-billing and getting payment from clients who are delinquent on their accounts.
4) Bundle products/services – People like a good deal. Bundled products and services are perceived as having an increased value over buying items separately. People also don’t like to miss a good deal, so by making your bundle a time-limited offer, you encourage consumers to buy now.
5) Have a back-end offer – Yes, back-end offers can be annoying, but they are effective and can come across helpful if done right. Make back-end offers that enhance the purchase and/or continue to solve the customer/client’s problem.
6) Set up a follow-up system for repeat customers – It’s more difficult and costly to attract new customers than to bring back old ones. To encourage repeat business, start by providing high-quality products and services along with good customer support. After that, create a system to keep in contact with former customers and offer incentives for them to come back. Email and direct mail are effective ways to stay connected. A rewards program or coupons can motivate them to return.
7) Develop a referral program – Second only to repeat business (#6), referrals are tops in generating new sales. People who are referred to you are already primed to like and want to buy from you. Encourage past customers and prospects to refer new business to you. Sometimes all it takes is asking for referrals to get names. Or you can develop a referral program with incentives to people who send you referrals.