Money Management is one of the major challenges that almost all small businesses face. Understanding the prevailing and recurring issue, Ameet Parekh , a leading business coach shared a few steps that one can undertake to ensure a better cash flow management in a business.
Let’s understand some rules of how any small business can manage their money better and maintain a health financial books.
Negotiate hard on Credit Periods
A number of businesses often focus on discounts or negotiation on credit periods while hiring, outsourcing a vendor or even talking to a supplier. This is a extremely imperative to keep the cash flow in place. While negotiating with vendor and suppliers might give minimal discounts or a middle ground that would be beneficial for both.
Incentivize early payments
Always create lucrative offers and deals for early payments to ensure timely payments. This will help in maintaining healthy financials and relationship with channel partners. As an entrepreneur, you must get money in as early as possible in your company account.
This is one of the key steps implemented by bigger brands and company to encourage upfront payments. A large number of businesses also create flexible policies for minimum token amount or booking amount to create a healthy cash flow. Even if a 100% advance is not possible, partial payments can be helpful too.
Identify & review your expense
To run a successful business venture, one must keep a track of day-to-day operations that involve small expenses and transactions. If we miss out on maintaining the record, small expenses might end up becoming bigger expenditure later.
A healthy practice in every business must include:
- l Identify all your expenses
- l Review each of your expense and check for gaps to curb the same
If followed diligently, the exercise will help the businesses save a lot of unnecessary expense which otherwise can create a financial dent. The review process will also help plan future expenses as well.
Allocate budget for each department of the business
Budget Allotment is one of the key big issues faced by many businesses. More often than once, owners spend money on various operational elements of the business without keeping a budget at all.
Budget Allocation puts a cap on the money you can spend on that particular activity and helps in a long-term financial planning.
An efficient budget includes various business aspects such as marketing expense, day to day expenditure, staff salary, rent, petty cash, events, raw materials, purchase, supplies, etc. For example, you can have 5-10% percentage of your cash flow dedicated for marketing activities.
Market & sell everyday
One of the key mistakes business owners make is working in series. Which means that post lead generation, a number of processes are involved like taking briefs, sending quotations, negotiating and eventually wait for lead closure and the money to come in.
However, a reliable marketing system can help the business to generate regular leads on a daily basis and connect with prospects daily. Regularization of these activities will expedite the process and increase daily flow of money in the company.
Overall, the above mentioned steps is extremely crucial for keeping a healthy cash flow management. Therefore, it is imperative that marketing and sales need to be consistent throughout the year. And if one follows these few rules, it will lead to a better money management for any small business and pave way for a long term growth.
To know more, visit: - http://ameetparekh.com/bfc/