Manage Your Expenses Better in the Next 12 Months
If you have been struggling with cash flow in the past few years and you would like to reduce your regular expenses or make sure that you don’t find yourself in financial difficulties, you will have to come up with a plan. With so many cash flow management tools available out there, it is hard to choose the one that is the most suitable for you. Measuring everything will help, but you will also have to make sure that you are doing your research when it comes to maximizing your cash flow. Below you will find a few tips on implementing a better financial plan for the next 12 months.
Control Your Outflow
It is important that you control your outflow. You will have to have a budget for everything. If you haven’t yet created a financial account for the next year, it might be time to allocate your funds so you can make sure you are not just handing out money for different departments and getting into trouble. You have to learn to control your advertising budget by automating your sales funnels and reducing the cost of overhead. There are plenty of marketing automation methods that will help you control your outflow and better utilize your resources in your business.
Take Advantage of Technology
It might be a good idea to automate your customer service as well as some of your processes. If you haven’t implemented IT in your company and taken it to the next level by getting open source software that can be tailored to your needs, it might be time to get in touch with a professional IT consultancy company that will help you develop solutions that will improve your efficiency and make the most out of your human resources while limiting the cost of administration. When you are paying too much for admin, you have two choices; outsource or implement technology.
In some cases, we are all short sighted when it comes to development areas and can’t see the areas where we should make improvements. The good news is that there are plenty of great online business monitoring methods that will help you measure the cost of production, customer acquisition, maintenance, and the time needed to deliver the complete product or service to your customers. Don’t be afraid of the numbers and stats; they are your best friends. You can get online apps and software that will help you measure the productivity of different business areas as well as individual employees.
Once you have identified the productivity issues in your company, it might be time to get an action plan in place. If you haven’t heard about Lean production methods yet, it might be time to enroll in a training so you can improve your business continuously and learn how to identify the areas that need your attention. Whether it is waste of time, resources, materials, or marketing budget, Lean will help you find the places where you need to make a change, and take the guesswork out of your management.
Compare Suppliers Regularly
One of your regular expenses – if you are in the manufacturing business – is the cost of raw materials or production tools. No matter if you are running a busy lab or a food manufacturing complex, you will need tools, disposable materials, and raw materials. You don’t have to stick with the same suppliers just because you have been with them for a long time. Instead, it can be a good idea to compare offers and get tender projects out on the market so you can make suppliers compete for your business, offering better payment and delivery terms.
Not many business owners think about insurance when it comes to lowering their regular expenses. However, this is important, especially if you are operating in a highly regulated industry. If you have liability insurance, you will be offered more contracts and better payment terms. Once your business partners know that you can deal with and are prepared for emergencies, you will be more trusted by them. Insurance cover for your employees and your equipment will be beneficial for your entire cash flow.
Improve Your Credit Rating
There comes a time in every business when you need to finance expansion and technological improvements. To make sure that your project goes smoothly and you don’t end up with unmanageable business debt, you will have to continuously work on your credit rating. There are several ways you can improve your business credit, such as making sure that all your lease payments are going out on time, as well as your fleet insurance payments, and you are able to deal with emergencies when they occur.
Get a Line of Credit
Being prepared for money emergencies in your business is important to optimize cash flow. You shouldn’t only rely on the insurance cover, but also the line of credit you secure from your bank. Once you have a good credit rating and a good conduct of payment, and you have been in business for a number of years, you will be able to improve your finances by having emergency funds to back you up when your equipment breaks down or you need to fund a large project.
Make Smart Investments
Your investments matter when it comes to financial freedom, and you can reduce your regular expenses by making smart business investments that get you returns every month. Creating a way of adding value to your products or services will justify a price rise and help you improve your profits. Likewise, if you invest in a product or service development project that will help you create a residual income, you are talking about money well spent.
If you are looking to reduce your regular expenses and improve your cash flow at the same time, you will have to take advantage of technology and management tools and practices, such as Lean. Try to eliminate waste on the HR and production level, and make smart investments that will help you improve your regular income and reputation.
ContributorDallas Dorrall is passionate about music and is living her dream managing and promoting Nashville/Muscle Shoals based Country Music Artist, Johnny Collier, currently touring the US. While traveling, she enjoys reviewing new artists, restaurants and nightclubs. Dallas is crazy about her family and friends and attributes her enthusiasm for life to a quote by Marianne Williamson (which she still reads every day) entitled “Our Deepest Fear”.