Small businesses often end up with problems regarding short-term cash flow. If you’re having issues with cash flow right now, you’re probably looking for ways to increase it. It’s good to know about all the different ways you might be able to improve your business’s short-term cash flow. Here are five ways that you might be able to improve cash flow so you can see whether they’ll be helpful for your business.
1. Defer Spending on Large Projects
If you have large projects you’re interested in pursuing, like building a new location, you might want to slow or postpone some of these projects. The pro of this option is that it can redirect cash to the core of your business, which is the most crucial part of the business. However, there is a con in that your project may be incomplete for a period of time. If your business is really struggling, this can certainly help rescue it.
2. Reduce Your Advertising Spending
Advertising is a crucial part in getting your company out there and helping people know about your product. However, you need to make sure you’re not advertising more than is beneficial. Remember that you need to create an advertising budget and stick with it. You might also want to switch around where you’re spending your advertising money; if you’re currently advertising using traditional methods, consider online advertising to see whether it can be helpful.
3. Compare Necessary Expenditures to the Marketplace
There are certain necessary expenditures every business will have. For example, you might need to pay for internet access and phone service. If you’re currently paying a lot of money for something that’s necessary, like phone service, look into other options for that service. You may find that you’re able to reduce your costs in these necessary areas dramatically by doing something like switching from a landline to a VoIP.
4. Take Advantage of Mortgage and Rent Relief Programs If Necessary
If your company is really struggling, you may need to look into more serious measures like mortgage and rent relief programs. These can help in areas where your company currently can’t even pay for the mortgage and rent of the building you’re in. Some states have rolled out these programs in response to COVID-19, with different mortgage and rent relief programs for individuals versus small businesses.
5. Explore Pay Cut Options
If worst comes to worst, you may want to consider pay cuts. However, be strategic about who’s getting the pay cuts. Great businesses will often shift pay cuts to the CEO and other high-paid individuals in the company before cutting the pay of lower-salary individuals. Indicating the CEO’s willingness to take a pay cut can increase employee morale, while cutting lower-salary individuals’ pay can instead decrease employee morale.
Short-term cash flow is important, but it’s not the only important thing to pay attention to. You want to decrease business costs and increase business profit all the time. Make sure you’re thinking about all the ways in which you can do both of these things if you want to succeed as a business in the long run.
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