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3 ways to manage your cash flow in order to boost your business to success
We're all trying to make more money online, but do you ever think about managing your cash flow in order to boost your business to even more success? Many companies fail because they don't talk with their partners about cash flow and how to manage it. Actually, one of the main reasons for businesses failing is over spending when they should really be saving for a rainy day. A lot of businesses will spend, spend and spend some more to make their profits go up and up, but they never think about a big mistake setting them back. If they are constantly spending their money and not saving some of it for rough times, they will go broke shortly after their first big mistake.Here are a few things you should focus on when managing your cash flow
1. Multiple Revenue Streams
I'm sure some of you are saying "Well I haven't have any big mistakes" and that's good and all, but would you jump a dirt bike 100 feet without having health and life insurance? If you answered "YES I WOULD!" then you've never had a big financial hit which kills most businesses. It doesn't matter if you haven't made any big mistakes, yet. You will make some mistakes along the way and they could all compile which eventually could turn into a big mistake and make you push back deadlines or shut down completely in order to fix everything.
Some of you may not think that having multiple revenue streams should be in this discussion, but you're wrong. Increasing your cash flow by diversifying it, means you're setting up a few or a dozen money making websites, systems or businesses in order to keep the main business well financed. I'm sure you've heard in the past when I talk about have multiple streams just in case one dries up. If you lose a revenue stream, you can focus on making the others even better. Never rely on just one stream because it's very risky.
If you have just one stream, you're putting all of your eggs in one basket. How many times have you heard "Don't put all your eggs in one basket?" well it's true, you shouldn't lol.
2. Talk about your cash flow regularly
When it comes to running a business, you will need to talk about the money coming in and out with your partners. If you're not tracking all of this, you won't know what you're actually making and spending. Eventually you could be spending more than you're making and that means you're slowly killing your business.
Things you'll need to monitor and manage:
- Incoming cash flow (General)
- Outgoing cash flow (General)
- Advertising budget
Sure, you may be small now, but what happens if you get big and have to pay employees and their benefits? If you're not monitoring and managing all of this, you will go under fairly quick and your business will need to be either sold (if you can) or liquidated. This basically means you need to sell off whatever you can in order to make enough money in order to get your head above water and out of debt.
3. Pre-Negotiate payment times
One of the worst things that can happen when working on a big project is the client not paying on time or not wanting to pay because they think something wasn't done on time or properly. I reduce this type of risk by simply writing everything in a contract about when the payments will be due. I don't say "Once we get to stage 2 of the design, you will pay the second bill" because that just means the client has the power to say we're not in stage 2. I give them a specific date in which I think we'll be ready to move on to the next stage, and that's when the client pays. I don't risk it by letting them determine how far along they think we are with something because doing that has bit me in the @ss before lol.
Now you don't have to be a hard @ss about this, you simply let the client know that you have pre-set dates on when they should be paying for your services. You will set the dates a few days, weeks or months after when you think the work will actually be done just to ensure you will have everything ahead of schedule when payment is due. This little trick makes the client more than happy to pay up because you're working quicker than anticipated, even though you anticipated being done earlier but put a later date just to play it safe
Increase the amount of revenue streams you have, but don't make them all at once. Work on one and get it profitable, then start on another one while still boosting the first. By the time the first one is plateauing, you will have a few streams up and running that you're trying to build up. The first stream can then fund the next few and eventually you will have a profit machine doing the work while you manage everything. You'll also need manage your cash flow so you know for sure you're not over spending and that you're safe if something does go really wrong. Pre-negotiating your payment times is something you should really focus on and get it right the first time. It's super annoying when a client doesn't want to pay because they think your work isn't at the stage you think it's at. Just remember, the client IS NOT always right lol.
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