Are you looking for ways to boost your cash revenues? Is your cash flow always a problem to you? If you are always “cash strapped” consider the following recommendations.
Follow the money trail.
You won’t be successful in business if you omit to systematically track your income and expenses as well as record those who owe you money and others who you owe money to. Shoe boxes are for shoes, not for business records, so make sure you have proper systems in place that enable you to assess at any time where your business is at. You don’t need to have big, expensive computerised systems. There are many low cost programs available today that can do the job very well. Make sure you have a system and/or software that will allow you to track every transaction in your business, because without this information you will never know where you are at, or in which direction you are going, or what you need to do to correct any glaring problems.
Make sure all records are up to date, especially your cash recording system because monitoring your cash situation will be critical.
Be happy when you pay tax.
Most business owners are absolutely ecstatic when they find they don’t have to pay any tax at the end of the year. The trouble with this scenario is that if you don’t have to pay tax, it stands to reason you can’t be making any profit. And if you aren’t making any profit, then why are you in business? Too many business owners make decisions in their business venture based on the one goal of reducing their business profitability so their tax is minimised. One has to ask whether it would be far better to make a high profit and pay the tax on it, because at the end of the day you will be left with a greater net income and more money in your pocket after the Tax Man has taken his cut
For most small business owners, what the tax man considers to be profit in the little business is actually the owner’s pay cheque. That profit is the net income after all expenses, and this is used to pay the owner’s salary. How many business owners work their heart out just so they can reduce their take home pay cheque? No one, obviously. It doesn’t make sense. You wouldn’t put up with this “reduction” from an employer, so why put up with it now from your own business?
Never condemn yourself to a life of poverty just to avoid paying taxes. It’s far better to make as high a profit as possible and then use all the legal strategies and means available to you under the law to minimise the tax you have to pay on that profit.
No one likes paying tax, but everyone likes making money. The bottom line is this; if you are paying taxes, it means your business is making money. So go out and make more money. Don’t let the thought of paying tax hold you back. Remember, the maximum tax rate will only be a proportion of the full dollar so you can’t lose.
A word of caution: Don’t increase your profits only to end up spending it all. Make sure you plan ahead for the tax on that profit. Remember, the profit belongs in part to the tax man, so make sure you only spend the portion which belongs to you.
Make sure you get paid on time.
Always get your customers to pay on time. It’s no use doing work if you are not going to get paid for it. Don’t extend credit unless it’s absolutely necessary. As soon as the work is finished, send in your account and if the account is not paid within the normal payment terms, don’t be afraid to send a letter or statement reminding your customer that the account is due. You don’t have to be rude or aggressive. Just be firm. Concentrate your focus on preserving the relationship built up. If your customer or client has legitimate complaints then don’t hesitate -fix the problems.
Keep your customers close – and suppliers closer.
Look after the customers who have been with you from the beginning. They are the ones who have stuck with you through thick and thin and they will be worth a lot of money to while you are looking after their business affairs. If they were not satisfied with your service they would have told you so long ago. And as they are obviously satisfied with you, they will refer other businesses to you regularly.
There is nothing wrong with looking for new customers, but don’t forget the old ones. Keep in touch with those old ones because they are often a great source of referrals of extra business. It’s a fact that you can build a successful business around a smaller number of satisfied customers by simply providing them with excellent service and excellent products.
Loyal customers will always be “good money in the bank”. They are easier to work with because they know how you operate and how you like things done. It’s far less expensive to keep those old customers happy than it is to find new customers.
Watch and use your break even point.
The break even point is that moment in time when your income equals your expenses. Once you exceed that point you are said to be making a profit. If your income is higher than your expenses - that’s a profit. If your expenses are higher than your income – that’s a loss.
Knowing your break even point is absolutely vital, because you must always be aware how much it is costing you to produce the products or deliver the services in your business. If your business is unable to meet its day to day costs plus financially “support you”, you are not breaking even. Your system should be able to highlight at any time the total number of sales you are making, their value and the cost of generating those sales. It is only then that you will be able to find out what level of sales you need to achieve to cover expenses and how many customers you need to sell to, to meet your sales targets.
If you can’t reach the required income level, you may have to look at how to reduce your expenditure. Make sure you fully understand what break even is all about. It is in fact, a powerful business tool that helps you make decisions about your marketing, go forward strategy, expansion, staff and prices to name a few.
Maintain friendships and don’t burn bridges.
Everyone has good clients as well as bad clients. Good clients always cooperate. They are never any trouble. Bad clients are a continual “pain in the butt”. They constantly moan and complain and are generally late in paying their fees. Bad clients are always angry and annoying and they will blame for any delays or mistakes at the “drop of a hat”. Good clients take the time to treat you with respect. They extend manners and common courtesies that one would extend to any other human being.
Let’s say both the good client and the bad client ask you for help. Who are you going to “knock yourself out” for? - Obviously the good client who treats you with respect. Is that fair? Not at all, but you are being human.
Take the time to look after folk who provide you with your income. Build bridges and establish relationships that last. The more satisfied and loyal your clients are, the greater will be your cash flow.
Work with budgets.
Most people are afraid or too lazy to maintain budgets. “Budgets are our friends” is a saying often heard in the marketplace.
A budget is simply a plan. It helps you to stay on your pre-determined track and focuses you on what you have to do to achieve something. If the budget is a financial one, then the goal is a financial profit. If a budget is a sales one, then it sets out how to achieve your sales goals.
Having a budget for your business could be the difference between piloting an aeroplane with instruments or flying blind in a fog.
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