The Key to Cash Flow: Plan for Tomorrow, Take Action Today.
Invest in the technology and processes that will drive your growth
“Entrepreneurs should consider what data points will be most helpful down the road, when their business is bigger and more complex and decisions need to be made more quickly,” says Jared Siegel, partner at accounting and financial advisory firm Delap LLP. “Many things in business are better if they’re built before you need them. A good set of books is one of them.”
Especially in the launch stage, paying close attention to your pricing and costing strategies is essential, because inaccurate estimates of either can throw your company into cash flow chaos. Accounts payable and accounts receivable play an equally critical role in helping keep your cash flow under control. By streamlining AR-related workflow from the beginning, Siegel says, invoicing can keep pace as the business scales.
An invoicing system that works well will be quick, efficient, and allow you to get a snapshot of which clients are current on payments and which are falling behind. That information can help you spot situations in which you need to adjust your terms of payment at the front end, which in turn “can go a long way to optimizing your cash flow in the early stages of your business,” Siegel adds.
Expand Your Demand
Another strategy is to use your entrepreneurial creativity to mitigate the impact of seasonality. “Look at your product offerings and consider ways to grow interest in whatever it is that you’re offering,” says Michele Markey, vice president of Kauffman FastTrac, a global provider of training for aspiring and established entrepreneurs.
For example, she says, look for ways to expand your business to include complementary products and services that are in demand during traditional down times. Another option is to use those periods to educate and inform existing and prospective customers to increase interest in and demand for your products and services before the next upswing in your business cycle.