Tips for a Cashflow Crisis
I know that with COVID-19 we have all fallen on some tough times when it comes to business and cashflow. So I thought I would share some pointers on how to improve cashflow.
First and foremost get in the mindset of taking ACTION. Without exception people who experience cashflow limitations are relying on habits that are not serving them well in business.
If Cashflow is CRITICAL then ACT NOW. Most of it has to do with testing and finding your numers.
Prepare a plan of Action including
- Calculate breakeven points for business and all sales people
- Reduce non-income generating expenses by 10%
- Increase conversion rate by training the team in sales
- Set a target for increasing your average $ sale and then put in place 5 strategies to help increase it
- Ask for help
- From suppliers- would they accept a payment arrangement for next 6 months
- From team- explain the situation to them and ask for them to rally around and put in 110% effort. Ask for commitment from them to increase productivity and reduce expenses
- Reduce all debtors starting with any over 60 days
- Reduce owners drawings to minimum amount.
- Upsell or Cross Sell
- Sell like crazy
- Sell unwanted assets
- Understand Cash Gap concept
- Calculate gross profit margin on everything you sell and then focus on the items which are bringing in the most total profit (volume x margin)
Just remember that you are not the first person to experience tight cashflow in business and you definitely won’t be the last. We are all in the same boat right now and there are some things that we can’t contorl, but you CAN control your own actions.