This time of year, many business owners take inventory of how they’ve spent money over the past 12 months. Were you penny wise and dollar foolish? Were you the Santa Claus of cash flow, or Grinch like? Let’s face it; if your business is not producing a profit, you won’t be around very long. Mastering cash flow at any business stage is essential to remain viable. Here are 5 steps you can take to master cash flow in your business.
1) Know Your Numbers – what gets measured gets improved. What does it cost to run your business? What are your fixed costs? Is there anything that can be trimmed? Here are a few places to look for cost cutting without altering your business lifestyle:
a. Cell phone plans. Carriers compete based on price and benefits. Take a few moments to evaluate your plan’s monthly fee and plan design. Compare it to the competition. I did this recently and reduced my monthly fee — and got a better plan design!
b. Internet, cable. Same as above.
c. Landline services. Do you still need them? If you do, look around for alternate plan designs. With all of the options available (VOIP, traditional, etc.) you might be pleasantly surprised.
d. Equipment leases. Is it time to negotiate a better contract?
e. Subscription type services. Take a look at the things your firm has set to auto-pay. Are they all necessary?
f. Memberships. Look at the costs for association-type dues, like chamber of commerce, industry associations, etc. Are you making good use of the membership? If not, it might be time to cancel.
2) Employee Head Count – do you have enough staff? Look at what you are doing on a daily basis. What could be delegated to someone else? As the business owner, you should be spending 80% of your time working ON the business, not IN the business. Your roles should entail all of the things that no one else can do. Everything else should be delegated to someone making a lot less money than you.
3) If your company needs to generate more revenue, take a look at your “low hanging fruit." What services or products do you sell that are easy to move? How much more do you need to sell to get the cash flow you need? Sometimes, it just takes a minor adjustment and focus to get sales to the needed level.
4) Employee Benefits – have you reviewed your benefit package? Maintaining a cutting edge benefits package will help your firm retain and attract top talent. An annual review of what you are offering, the cost and benefit design is recommended. Having your benefits set to “auto pilot” can become an expensive error.
5) Salaries – are you competitive, too generous (Santa Claus like) or do you undervalue your talent pool (like a Grinch)? Being in alignment with industry standards can actually save you money in the long run. There is a real cost to hiring and training replacements. If you stop and calculate what it would cost your firm to replace your top talent, you will probably find a bonus or raise to that employee will be less expensive.
THERESE R. NICKLAS is a CERTIFIED FINANCIAL PLANNER™ and Certified Money Coach®. She specializes in helping successful female entrepreneurs handle the financial fallout after a big lifestyle change (like divorce, career, loss of loved one, etc.). She does this by teaching smart money strategies that help her clients feel confident about their financial future.
As a Certified Money Coach®, she identifies unconscious patterns, beliefs and behaviors around money that prevent clients from reaching their full potential. Money Coaching helps identify money blocks and shows how to push through them. Clients experience much greater personal satisfaction, increased abundance, and enhanced success in life. Helping clients plan their future while enjoying the present is not a profession, it is a calling. When she’s not working, Terri enjoys spending time with friends and family, travelling, cooking and hiking with her grand-dog, Jackie.
The Wealth Coach for Women Inc.® (“WCFW”) is a registered investment adviser offering advisory services in the State of Massachusetts and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. All written content on this site is for information purposes only. Opinions expressed herein are solely those of WCFW, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.