5 Ways to Increase Your Cash Flow Very Quickly: Nathan Archer
5 ways to increase your cash flow very quickly
Cash flow is king! Even a highly successful business can find itself in real danger if they do not stay on top of their cash flow. During this corona virus pandemic, we have heard of major companies struggling not only because of the crisis, but it being compounded due to cash flow constraints.
As I coach many small to medium businesses, I am continually amazed by how little many business owners are across their cash flow. They say to me, ‘Nathan, we billed $XX this month, why is there no money in the bank?’
I think every one of us would like a bit more profit in our businesses. So here are 5 ways you can increase your cash flow very quickly.
1: Get more customers
Of course, more paying customers is going to equal more money in the bank, but how can you attract more customers?
Well, when was the last time you really looked at your marketing efforts? Many small business owners have no idea what the return on invest is for their marketing efforts.
Firstly, do you have a marketing plan, or are you kind of reactive and throw money at marketing only when you get quiet?
To really understand your marketing efforts, you need to know your numbers!
Do you know what it costs (in dollars and cents) to bring in a lead?
Do you track what each lead costs from each individual marketing initiative? Some leads may be more expensive, but they may bring a higher return per client.
Do you know how many of those leads turn into paying customers?
Do you know your average sale per customer?
If you answered ‘no or not really’ to any of the questions above, then you could be wasting a lot of money on marketing that does not work.
Let’s be honest, you are probably an expert at what you do, but that is probably not marketing. Now unfortunately so called ‘marketing experts’ will wow you with a flashy and convincing spiel, but run a mile when it comes to the specific returns you will get. They will say things like, ‘You can’t put a value on branding.’ Or ‘Social media is about growing followers not only making sales.’
So before you spend another cent on marketing, take stock of what is working, get to know your numbers, then make informed decisions about how your marketing spend will get you more paying customers.
2; Get customers to spend more per visit
Pretty simple really. The acquisition cost of a customer remains fairly constant, but you can greatly increase your profit by increasing the amount they spend per visit.
Think about the services and products your average customer buys each time they visit you. Now think about your best customers, what is different?
Are there products or services that your best customers buy that other customers don’t even know you offer?
What extra products or services do your highest spending customers buy that you could suggest other customers.
Another strategy is to look at ad on sales:
If you are like me, we have all been sucked in by the chocolates at the supermarket check out, or by an upsell like ‘Would you like fries with that?’. Research has shown that when you have already made a decision to spend money, you are more likely to spend more with an ad on because you are already in a spending mindset.
So, does your business offer an ad on that could make you more money very easily?
I will say here that it needs to be genuine and offer great value to the customer. Paying more money for junk could make you a little extra cash in the short term but damage your reputation in the long run.
A third way to get customers to spend more per visit is to package products together.
Again using the supermarket as an example, you may have seen an offer of ‘buy 2 get 1 free’. What these offers do, is make you buy two items at full price to get the third for free. In reality that is a 33% saving for each item, but would a 33% discount have created the same sales volume? The answer is probably not. If you simply reduced one product by 33% you may sell a few more, but in this case, you triple the amount of stock you move.
Another example is at the petrol station where there may be an offer to buy a chocolate bar for $3.50 to get an extra 4c off your fuel. Now if you fill your tank with 50L of fuel you will save $2 off the fuel, so in reality you got the chocolate bar for $1.50. Their cost for that chocolate bar was maybe 40c-50c so by creating the offer the petrol station made an additional $1 off you.
Again, I urge you to be genuine about this. If you are packaging products together, create and offer that serves your customer. Create a package that makes sense. All too often I see packages that contain one thing you want, and the other things are there just as fluff.
A recent example I received was free delivery with my new dishwasher. It solved a pain point of arranging a trailer to get it from the shop and made my life so much easier.
3: Increase your prices
I was at a seminar and the speaker used the bait, ‘At the end of the seminar I am going to tell you how to make 10% more money from tomorrow’. We all stayed till the end to hear the magic sauce and this was it.
When was the last time to looked at your price list?
Are you undercharging for the true value of your product or service?
It may seem simple and it is. Your baseline cost remains the same. If you increase your price by 10%, that is pure profit.
It is not always practical to increase your prices. It may be especially hard right now in the midst of corona virus, but I suggest scheduling it in your diary to review your prices every 6 months at least.
4: Increase your productivity (this is not just about cutting costs)
As the old saying goes, Time is money! but maybe you can’t ‘bill’ every hour you work so how could you increase the time that you are actually charging for? One simple way is to outsource or delegate.
Take a look at your diary for this coming week and ask yourself, ‘What tasks can I delegate or outsource?’ You may find that there are a number of things that you have just always done, but by delegating them you will be freed up to work on projects that actually are making money.
One other way to increase your productivity is to decrease the time you waste every day. Did I just call you a ‘time waster’? yeah a little. The truth is that our productivity is greatly reduced by some of the technology and inventions that we think have made us more productive.
Let me give you an example;
When you get an email, do you get an audible or visual notification on your computer? If so, how long do you think it is before the average worker checks that new email?
The answer is 6 seconds. Yep that quickly.
Now think about wow many emails you get a day? That is the amount of distractions you are letting ‘steal’ or ‘waste’ your productive time. Now I am not saying cut out email all together. My suggestion is to create blocks of time without your email open. What if you had just two hours of your workday email and phone free? How far forward would your key projects get if you spent just two hours a day working on them uninterrupted?
If you can’t commit to two hours a day, what about 1 hour or even just a 30 minute block of time where you are not taking calls, messages or emails where you can work on your most important project?
Give it a go for just two weeks, then I would love you to email me (my details are at the bottom of this page, and I’ll only check your email in my allocated block time ;-)) and tell me how much more productive you have been and what difference it has made to your cash flow.
5: Follow up debtors
Chasing money is not fun, but avoiding the phone call is causing you financial stress.
Having worked as a contractor with large organisations, I often found that my invoices sat on the desk of accounts payable waiting for a PO number or approval code that I was not aware was needed. When I followed them up, I was able to get the invoice approved and paid quite quickly.
Some large corporations have different payment terms depending on what business category you fit into. When I recently called a large mining supply company to follow up an invoice, the accounts payable person was unaware I owned a small business and not only expedited my payment for that invoice but put me into a different system so that each future invoice was paid within two weeks.
Just asking the question from your clients could help your cash flow in a big way.
Now, if you are not comfortable chasing people because you feel it may damage the personal or sales relationship you have with that person, then outsource it. You could ask your bookkeeper or accountant to do it for you.
So now you have 5 simple ways for you to increase your cash flow very quickly. May I encourage you to pick just one of them and schedule 30 mins in your calendar this week to implement that one strategy. Why am I asking you to schedule time right now? Because I know that if it is scheduled in your diary it will get done, but if you just add it to the ‘to do’ list then most likely it will still be on that list in a month’s time. If this blog has triggered some ideas for you then you must schedule time right now to implement them!
Remember the Nike slogan; ‘Just Do It’
About the author:
Nathan is a Certified High Performance Coach who works with business owners to help them achieve and sustain High Performance. He has been a small business owner for 16 years and led a team of four staff, so he has the real runs on the board and practices what he preaches. If you would like more information on what Nathan can do for you or to arrange a free chat with him, click the link below: