SMB owners looking to improve bottom lines will often focus on spending less, but you can only decrease expenses so much. On the other hand, you can boost profits infinitely higher. These revenue-generating ideas can help you improve your cash flow so you don’t need to rein in expenses.
Review Your Pricing
The first step many take to improve their cash flow an profits is to raise prices. Consider raising prices on accessories or add-on services, as consumers tend to be less sensitive to mark-ups on extras. You can also try a strategy that helps raise prices and retain customers at the same time: value-based pricing. With this, you’ll need to determine how you can increase your customers’ willingness to pay by creating additional customer value. To do so, you need to develop a deep understanding of your customers’ needs and perceptions of value, and learn to communicate the value of your products and price them accordingly.
Get to Know Your Customers
Learning about your customers is one of the best ways you can begin to improve your cash flow. By understanding shoppers’ buying habits, you can devise customer relationship management strategies to drive sales and profits, using tricks like promotions and complimentary services. To develop these strategies, companies collect vast quantities of data about consumer activities, analyze customer behavior and forecast shopping trends. You can start by collecting information on your customers, like enquiries, order forms, feedback cards and interactions on your website.
The old saying that you need to “spend money to make money” is true for business, particularly when it comes to upgrading technology. Today, tech tools can help companies increase sales, cut IT costs and maintain their competitive cutting edge. It’s no surprise that KPMG’s 2014 Cloud Survey Report found more than 70% of executives felt implementing cloud technology helped them improve business performance and reduce costs.
For small businesses, cloud-based cash flow management tools can help improve your cash flow and profits by speeding up essential tasks like invoicing, quotes and orders. You can easily track who owes you what and chase late payments.
Send Invoices Immediately
Many small businesses ship products and expect payment later, meaning the amount due becomes an account receivable. While this doesn’t impact your net income, it reduces cash flow. You can turn the tables by sending invoices immediately. Better yet, speed up the invoicing process by sending electronic invoices, rather than paper ones, which are easily lost.
Lease Equipment Instead of Buying
Finally, you can consider leasing equipment, office space and supplies instead of purchasing them. You’ll get guaranteed use of the asset while you make regular payments to the lessor, which are generally much less than the cost to purchase the item. In India, more companies are leasing to improve cash flow and minimize financial risk. This is why we’ve seen a rise in leasing in the construction industry, where rental centers offer equipment at significantly lower prices.
Now you know some ways to improve cash flow, you can take action to boost your bottom line. Review pricing, target loyal customers, send out those invoices promptly and consider which tech tools you can benefit from.