Usually small business owners look for coaching advice as a result of cash flow issues.
When it comes to cash flow, just like every other aspect of your business plan, setting goals and working towards them are the most efficient means to an end.
Often small business owners pass off the importance of cash flow and instead focus on branding, generating leads and following up with clients. But when the cash flow well dries up, so does the business.
And, by then, it can be too late to be rescued by a business coach.
Cash flow forecasting is one of the most efficient management systems to implement. Staying ahead of the game is the only way to effectively prevent a crisis.
When forecasting, consider the following five concerns:
Know your expenses like the back of your hand. In particular, when attracting new customers, remember that selling anything at a loss will negatively impact cash flow. When strategising, employ online tools such as ‘break even calculators’ to assist, or better still, involve me as your business coaching support! Timing issues can play a real part in cash flow crises and we can factor in real life a lot better than software products.
Bundle up! Packaging products and services together gives the perceived notion that they are intrinsically of higher value. Psst! A little secret- these are of very little cost to you! Lowering the risk by offering guarantees can allow an increased price point.
Balance the offer by boosting the back-end. Offering a free/low cost initial deal? Cover your cost by boosting the back-end – for example charging premium for off-hour services.
Buy, sell, repeat! Loyalty is king when it comes to customers and repeat business is considered ‘the holy grail’. Contracts and long-term agreements are your friend, and can also offer stability and ease to the client, when proposed in the right light. Consider loyalty programmes, club cards, VIP offers, special sales for repeat customers, etc.
Offer something the competition does not. Encourage customers to pre-buy new product lines or accept their returns on old products, with a discount on their next purchase.
Ideally, as my business coaching tip, you should be retaining 10-20% of monthly revenues to be re-invested back into the business. This revenue is a vital investment in the growth of your business and could allow you to continue improving your systems and overall performance.
Also remember to use your cash to build cash. Ensure you are utilising your cash balance to its potential. Again, professional advice from qualified business coaches can save you a lot.
These tips come down to one simple thing: perception. The client is resistant due to their perceived notion of risk. The more you can reduce that risk and deliver goods as promised, the more likely it is that you will engage in long-term relationships, and therefore boost cash flow.
Mike Reddy is a Chartered Accountant, business coach and advisor helping businesses in Sydney, Melbourne, Brisbane and Gold Coast to easily increase their profits and cash flow. He is currently President of the North Sydney Chamber of Commerce, a Regional Councillor for Sydney North East and a member of the Institute of Chartered Accountants Sydney leadership team. As well as advising businesses, Mike presents business development seminars and webinars and is regularly contacted by the media to comment on small business matters. You can connect with him on Facebook, Twitter and Google+.