5 Ways to Control Cash Flow In Your Business
The ability to control cash flow has always been an issue in my business. Even though I’ve always come out making a profit and things seem to work out, the concept of managing cash flow with irregular revenue has always been a weird one for me to grasp.
And, I’m not the only one who has a hard time controlling cash flow, according to research, one of the main reasons for business failure is running out of cash.
In this article, we’re going to discuss some of the ways to control cash flow so your business remains profitable.
What is cash flow?
Cash flow is the amount of money coming into a business (revenue) versus the amount of money flowing out of a business (expenses).
If you have more money coming in than going out, then you’ve made a profit and have positive cash flow.
If you have more money going out than coming in, then you have negative cash flow.
How to Control Cash Flow
While there are lots of fancy spreadsheets out there to help you track this stuff, it’s really difficult to control cash flow. At least not once you see where your problem areas are.
If you’ve had issues up until now, I’m right there with you. It can be an emotional process to see money going in and out as you build your business. Especially if you’ve been bootstrapping and using all your own money.
Before continuing with ways to control cash flow, be mindful of your emotions. It can be hard to see where we’ve made mistakes and that can stir up a lot of stuff. But, the good news is once we know what mistakes we’re making, we can fix them.
And now, here are X ways to control cash flow.
Figure out your steady expenses.
I was recently complaining about my inability to understand cash flow when my friend (and accountant) when he pointed something out to me.
He said my affinity for experimenting and trying new things all the time has lead to not being able to better control cash flow.
In other words, that new software I wanted to try out, the person I wanted to hire because I heard something was working well, or starting to experiment with Facebook ads – while it’s all been beneficial to some degree – is making it difficult for me to keep my expenses steady.
Granted, it may take you a while to figure out what your expenses are. Everyone’s business is different and I do believe there is some trial and error involved in figuring this out.
But I think what my accountant was trying to get at was the fact that sometimes I’m impatient, get excited about something that can help my business, spend more money than I expected and then complain about cash flow.
This brings me to my next point…
Work with an accountant.
I’m always preaching about how business owners need to surround themselves with people who can catch their blind spots.
The truth is none of us are perfect and we all have challenge areas, so its in our best interest to have people around us who can call us out.
If you happen to have issues controlling cash flow, then you better build a good relationship with your accountant so they can call you out like mine did with me.
Find better deals for business services.
Another area where you can improve cash flow is to actually bring down expenses. That’s what I did when I changed web hosting providers. It’s also what I’m doing now as I shop around for a better deal with media liability insurance.
It doesn’t stop there, though. My all-in-one email marketing system now allows you to make landing pages within the system itself, so that will save me hundreds of dollars because I won’t need to purchase a separate service for that.
And let’s not even get started on processing fees. Those sneaky things will kill your cash flow if you don’t shop around for the best deal.
Take a break from creating so much and focus on sales instead.
Another issue I run into, and one that many creative entrepreneurs can relate to, is that it’s very easy for us to create things at the drop of a hat. In fact, many of us are super creators.
The problem is sometimes we have an issue with planning and executing the marketing and sales portion for all the stuff we’ve created.
For example, I’ve created tons of digital courses and a membership site, but it’s been a challenge for me to pick one thing to market and sell over and over again. The reason is because it’s much easier for me to just keep creating.
Now, the good news here is that if you happen to relate to this, then you likely already have a suite of products and services that will allow you to create multiple streams of income.
In other words, you have a good problem. You’ve already created what needs to be sold. Now it’s just a matter of selling it.
The great thing about running a business is that we can make more money if we need to.
Sometimes it’s a matter of finding the holes in a sales process, which isn’t a huge deal. Other times you just need to market more (as I’ve been experimenting with in my email marketing). And, even still, other times it’s just a confidence issue.
Once you’ve been in business long enough you begin to realize that you can make whatever kind of money you want. It’s simply a matter of a dealing with the challenges that are standing in the way of being able to do so.
Again, this is an area where you may need outside help. In my case, I entered a group program that would actually help me put a marketing and sales process in place for an offering because that’s what I’m missing and can’t seem to do on my own. It may not help my cash flow in the short-term, but it will help me increase my revenue down the road.
What are some of the ways that you’ve improved cash flow in your business? Share in the comments.