Several elements need to come together to keep a small business running. One of the most important aspects is cash flow, which is the total amount of money, physical or virtual, transferred in and out of a business. Having cash flow consistently into your business keeps your employees paid and the lights on. You need to learn how to convert sales into cash consistently and quickly so that you can build a safety net for the future. Luckily, there are a few simple tips to boosting cash flow for your small business.
If you want to improve the cash flow of your business, you need to consider increasing the price of your products. You might be under-selling your merchandise, so you need to go through some testing to find the perfect price-point. If you are under-selling your items, consumers might not take you seriously. If your price-point is unreasonably expensive, then people will turn to your competition. So, you have to find a happy medium where your price point is resulting in an increase in cash flow without a loss in sales.
Sell or Replace Old Equipment and Inventory
Technology is constantly advancing, so you are likely to have several upgrades in your computers and other equipment in the next few years. This can cause equipment to pile up in your office and remain unutilized. If you have any equipment that is unlikely to be used in the next 12 months, you should consider selling it. Depending on the item, you can sell it for a taxable gain. However, you shouldn’t sell anything below the book value for a specific item.
Another idea is to simply lease items instead of purchasing them- talk to your accountant or bookkeeper to weigh both options.
If you have a product that is consumed consistently and repurchased throughout the year, then you should consider instituting a subscription service. Having a subscription service allows people to prepay for an item, which allows you to receive cash upfront. It is also likely that you will have future sales from the service. Consider adding a nice upfront incentive to get people to sign up.
PL Consulting Can Help You Plan Your Budget!
PL Consulting offers a diverse range of bookkeeping and other financial services. Each of our services is customized to fit the needs of our client and his or her business plan. Our team can help you with each step of your business from organization, to budget, to financial maintenance. We are located in Pikesville at 119 Old Court Rd Baltimore, MD 21208. Contact us at 410.764.3731 or firstname.lastname@example.org so that we can assist you with your bookkeeping needs. Remember to stay up to date with everything PL Consulting by following us on our social media platforms via Facebook, Twitter, and Google+.Posted on