Much like any working professional, business leaders must continuously adapt to maintain success. They must develop new strategies or tools with at least one central goal: improving cash flow. This isn’t always as simple as acquiring new equipment or hiring more workers. Sometimes, the changes have to take place on a deeper level and may involve altering the company’s entire business model. This is especially prevalent in veteran business leaders, who often are not up to date on the new standards for success in today’s small business world. If they had started their businesses just a few years ago, they would simply be following the basic guidelines for establishing healthy cash flow.
Thankfully, the right advice is all you need to pull your business out of the past. Here are three common mistakes of veteran business leaders:
1. Lack Of Systems And Processes
Productivity and efficiency have a direct effect on cash flow. One very popular way to improve in both areas is the implementation of more systems and processes. In addition to automation, this widely used but ambiguous term refers to the documentation of certain periodic tasks, like training new employees. Since employee training at small businesses is typically handled by a high level employee, this process should be seamless enough to only occupy a reasonable amount of the employee’s time.
So, rather than having the employee “wing it” each time someone comes onboard, he or she should follow a documented process that ensures no important information is neglected. Another popular example of a documented process is template emails. Instead of writing out your pitch every time, create a template that you can now send to more potential clients everyday.
As for automated systems, a good start could be automatic bank transfers. Cash is automatically put into the bank and a portion of it is then transferred to a separate savings account. Automation is particularly advantageous for businesses that revolve around invoices. These businesses tend to have clients who pay late (or even forget to pay at all), possibly because they only send one invoice per month. Automated invoicing systems can create templates for invoices, keep track of what is owed to you by each client, and schedule reminders that are sent out a certain amount of days after the due date.
2. Ignoring The Need For Daily Cash Flow
Cash flow problems are the number one cause of small business failure. You can prevent this from happening by ensuring you have enough cash coming in to cover regular business expenses like payroll, taxes, and vendor bills. Some industries have little if any daily revenue, simply because of their traditional business model. Gyms and fitness centers, for example, only get paid by their customers once per month. Wholesalers, auto shops and even doctor’s offices could have lot of money coming in at the end of the month but almost nothing in the first two weeks.
One proven solution to this dilemma is to sell low cost products that many customers would likely be interested in. At United Capital Source, we have helped numerous fitness centers open up juice bars or purchase vending machines that customers took full advantage of before or after their workouts. Hotels could take a similar approach by opening a gift shop. These strategies might not generate a great deal of cash right away but our small business loans can be structured to reserve the bulk of your payments for busier periods. We can also tie your payments to sales without preventing you from covering the aforementioned business expenses.
3. No Marketing Message
Not every small business is expected to prioritize marketing or put massive investments into social media campaigns. But every business must at least have a clear marketing message. Figuring out how to market yourself most effectively can teach you a lot about your target customer. People want to buy from businesses that they feel understand their needs and the value of their demographic. They want to see that you are making a real effort to attract interest, as opposed to being generic or trying to fit everyone’s needs.
Veteran business leaders might not be marketing experts, but this is where companies like United Capital Source come in. We can provide the funds to hire a social engagement specialist or outsource a private agency to perform a branding makeover. If a traditional business term loan does not suit your cash flow situation, we offer several other products geared towards long-term investments like a merchant cash advance and revenue based business loan. The more traction your marketing message gains, the more payments you make.
Adapting to today’s climate is much easier when you know you are receiving non-biased advice. This happens to be one of our core values here at United Capital Source. So, if you are looking to borrow funds to improve your cash flow, you can rest assured that will never steer you in the wrong direction, even if that means we don’t make as much money as we could. Improving cash flow is a lengthy process, so you’d be better off with a business partner that is ready to stay with you for the long haul.