Tips to Increasing your Cash Flow
As a small business owner, your cash flow is the most important metric in your business.
Cash helps you make smart business decisions, pay yourself as an owner, save for taxes, and is the main contributor to building a profitable business.
If you’ve been low on cash flow and haven’t been seeing the profit you’d like in your business, you can apply these steps to start seeing results.
1. Start analyzing where you spend your money
Before you can make any changes to your cash flow, you need to understand where you are spending. Set aside one day to review your purchases for the past 90 days.
You’ll want to classify your purchases into different categories:
- Necessary for Business
- Not-Necessary
2. Create a Monthly Budget
Once you’ve become aware of where you are spending your money, you can determine where you can cut from your current operating expenses and create a budget for the month. You can break your budget into different categories of your business, such as your cost of goods/services, operating expenses, owner pay, taxes, and the amount you will allocate to profit.
3. Create Expenses Policies and Procedures to help reduce spend
Once you have an idea of where you are spending your money, it’s important to start building policies to help you reduce business spending. Some areas that you will want to have in your policy are the rules and guidelines for travel and entertainment, competitive bidding with vendors, approval of spending, and reimbursable expenses.
4. Perform a Vendor Analysis
Assess who your major vendors are and create a preferred vendor list of those vendors that provide you the best service and for the best price. Make an effort to only purchase from your approved vendors, and make sure you’ve negotiated the best rates.
5. Consolidate your Payment Dates
Instead of paying vendor invoices when you get them, set a schedule to pay out twice a month. This practice will establish more control in your business and give you more time and freedom.
6. Automate routine tasks in your Business
Paper, excel files, and a business without systems is a business that will not be able to scale. Take time to evaluate the systems that you use and where you can automate them. Automation will help build an effective workflow and help build more cash reserves.
7. Invest in People
If you want to build a sustainable business that can live without you, you need to have a team. People matter and will drive your business to the next level. Even if you’re a solopreneur, investing in a virtual assistant to help you with the administrative side of your business, will help you focus on activities that can move the needle to profit.
If you want to build a profitable strategy for your business and approach financial decision-making with ease, check out the Cannabis Business Minds website. We have so many tools to help you in your business!
