Operating your business, paying the bills, bringing in new work and keeping employees happy are everyday labors of love for the small business owners. But admittedly all of these tasks are affected by cash on hand; sometimes there’s plenty of it, and other times…well, there’s not. Figuring out your cash rhythms while growing involves a lot of trial and error. You can’t always control your circumstances and planning ahead to have extra cash on hand is always the best bet.
Here are five simple ideas to increase your cash flow ASAP for those of us living in the real world of running a small business. You know, the world where sleepless nights, ups and downs and turnover best describe your last quarter’s activity.
1. Raise your prices, but do this first:
When is the last time you raised your prices? It’s probably time to increase your fees, if it’s not long overdue! But don’t do it quietly. Announce to your current and past clients and customers that prices are going up as of a certain date, and explain why. The cost of living increases everyday; so does operating your business. If you’re new to the game you need to take the simple steps of calculating what it costs you to have a tech on the job. Here’s a simple example, click here.
2. Borrow for Tomorrow
One of the biggest barriers to small business growth is funding. Putting another truck on the road takes a huge down payment. Some business owners are dead set on not taking on any debt in their business; if you can do that good for you. But if you’re like me and realized the only way to make it happen when you need it most you’ll see the benefit of having a structured loan or line of credit available for such situations.
3. Ditch the One-Shot Services; offer Contracts & Packages
Monthly, quarterly and yearly service contracts are what separates so many successful small business from their competitors in our industry. If you’re a drain cleaning contractor you can’t always rely on the emergency calls to come in when your market gets clogged with competitors. But, you can bet on scheduled maintenance work to keep the payroll funded. The same can be said about HVAC/R you just need to identify your clients who have the need, like your local supermarkets or restaurants for example.
4. Have a “Sale” or Promotion
I hate the idea of reducing labor rates altogether but offering a “free” furnace or boiler inspection out of season can open doors to new customers and new business of you go into the job with added services. This is also known as a simple “up-sell” and has been the foundation for growth by the biggest and most successful service franchises in the business. You don’t have to lose money to make it in this situation, you just have to sell the add-on services once you get in the door to make the “promotion” a winner.
5. Sell or Lease Unused Assets
Take a look around. Maybe you’ve got extra space in the shop or office that can offer up a workspace needed for a startup in town and increase your cash flow by subletting. Do you use offsite storage, do you still need it? Operating a little leaner by consolidation can free up operating cash quickly. Look at materials on hand, identify overstock and move it out the door either thru a quick promotion or sell it outright to free up space for consolidation. I’ve made my local suppliers do the lion’s share of warehousing for me and that has saved me thousands of dollars monthly for years.
Good luck, taking a few steps toward increasing your cash flow can do wonders for your sleep schedule and get you on the path for growth. When you sleep better at night, you’ll be able to focus more on growing your business.