In the age of coronavirus, lockdowns, and business disruption, cash flow has shot to the top of the business agenda. 2020 has seen businesses attempt to alter their business models, adjust their prices, and streamline their processes to avoid disruption to the cash flows that ultimately keep them operational. Many businesses have failed in this task – and many have folded as a result. In this piece, we’ll take a closer look at what you can do to monitor and manage your cash flow to keep your company afloat during the hard times.
Setting Aside Profits
The bad times for your business are always in counterpoint to the good times. For every sales dip you have – whether that’s seasonal, or because of a change in the market – there will be a concurrent sales boost. It’s important, for your cash flow, that you don’t fritter away your profits in the good times. You need to save that extra cash so that you’re able to survive in the bad times, too. Create a business savings account or, even better, invest your cash in profitable outlets, to have access to cash when the going gets tough.
Sometimes, you’ll have no savings to fall back on – or, if you do, they’ll be too meager for you to use to really boost your sales and get your firm back into a profitable place. This isn’t an unusual circumstance: it’s actually a position that many businesses find themselves in throughout their first months or years of trade. In these situations, you need to look to loans like those offered to businesses by biz2credit.com to help you through and to give you a significant cash injection that will be spent on driving sales and profitability. You’ll pay back your loan over time, once you’ve regained your profit capability.
As with your stocks and shares investments, your business must be able to diversify as much as possible to remain stable in the difficult times. If you’re a business that sells only one product or offers only one service, you may be more at risk to changes in the market that might put a great big full stop on your business’ story. Instead, think of a different line of business – or perhaps even a different business model entirely – so that you have access to cash in profits when one arm of your business ceases to make money.
There are two ways a business can make use of financial experts. The first is to hire yourself a CFO – someone who knows the financial world inside out, and who will keep track of your finances for you throughout the year to ensure that you have early warnings when the going gets tough with your cash flow. The second is to outsource this responsibility to financial firms who will help support your business and your finances. Both options should help you to better manage your business cash flow in the future.
The four tips outlined above should help your firm get a grip on its finances and maintain a stable cash flow all year round.