As a business owner, you have a lot on your plate. You're working hard to build your business, but that doesn't mean it's time to stop thinking about the future. Your business is only as strong as you make it, and in order to build a successful enterprise, it's important that you stay focused on the little things—the things that can make all the difference between success and failure.
Never take your eyes off the cash flow because it’s the lifeblood of business.” — Richard Branson
To do these things, you need a strong accounting strategy. At this point, are you confident that you have a seamless strategy in place? If your current strategy is not as solid as it should be, consider these advanced SME cash flow tips and tricks for your small business.
Set sales prices right.
When it comes to earning profit for your business, your focal point should always be on your margin. Bear in mind that the margin isn’t simply your sales price, it’s your sales price with the deduction on your variable costs. Once you have all that calculated, you can then move forward to implementing your price alignment strategy, paving way to an improved margin as well as a better business profit.
Strategize a profit-sharing plan.
As mentioned in the previous item, one of the top priorities you should consider is increasing your margin. You can do that by getting your sales up. And getting your sales up means establishing a profit-sharing plan among your employees. Although this strategy is not always ideal for every business, looking into the prospect of profit-sharing could ultimately motivate your employees to work harder in exceeding their target sales, leading to better business revenues in the long run.
Don't confuse profit and cashflow.
Do not interchange profit and cashflow because these two are totally different concepts. When you say profit, you are dealing with the money earned through your business sales. On the other hand, cashflow is the cash coming in and out of your business. As it is, you need to plot out your cashflow to identify ways to manage your business expenses effectively.
Be involved in your financial reports.
Be extra cautious when it comes to your financial reports. As a business owner, you need to look into your business financial reports regularly. A financial report helps ensure that your company is complying with important business regulations., Plus, a financial report also shows investors the current financial health of your company.
Manage debt effectively
Managing your cashflow requires strong debt management initiatives from your end. As such, you need to know the specific terms of your loans as this is a very effective way to veer away from skyrocketing interest rates. Aside from this, debt management also allows you to strategize the wise use of your financial resources - you can avoid missing payment deadlines this way.
Putting your finger on the pulse of your cashflow is a necessary step to get your business running smoothly, and it's time to start being proactive in managing yours. Investing for the Future Adopting Cloud Accounting for Your Small Business to learn how we can improve the cash flow in your small business.
This post was first published 28 September 2015 and edited 24 November 2022. Edited by: Angelica Garcia