No company is immune from the consequences of mistakes, poor planning, or bad luck — no matter how big or successful. Here are two potential pitfalls your small business could face, and how you can avoid them.
Cash Flow Troubles
Cash flow is one of the most important aspects of a successful startup business. Many businesses that fail do so because of poor cash flow management skills. Late customer payments, seasonal fluctuations, emergency expenses, rising costs, and a number of other factors can create a cash crunch that threatens your company’s ability to survive and grow.
What can you do?
Start by filling out a cash flow statement using a template, which can show you when and where money flows in and out of your business, and helps you forecast cash flow hazards — allowing you to plan accordingly. Cash flow tools can also help you better manage your business.
If you are short on cash, your business may have to cut costs, borrow, generate more income, or do some negotiating. Beyond putting money aside during your more prosperous months, explore what costs you can reasonably trim without hampering operations, and find creative, budget-conscious ways to market your services or goods.
You can look at things like expanding sales to current customers, reducing inventory and reworking arrangements so you receive compensation sooner and can defer payments to vendors. Above all make it as easy as possible for you customers to pay you.
Moving to less expensive digs or seeking better rental terms could leave you with more cash as well. And if you haven’t raised prices in a while, it might be time to do so.
While you don’t want a debt overload, a modest business loan, credit line, zero-interest card, or other types of borrowing can help you through temporary cash flow problems.
Maybe you started a landscaping business because you have a green thumb and wanted to make a living in the fresh air. Yet here you are, sitting at a desk, overwhelmed by paperwork, unsent invoices, lost bills, and misplaced client notes.
Without proper organization and support, a small business can become the victim of its own success. One missed customer appointment can cause ill will — damaging your company’s reputation — and an unanswered call can send a potential client to a competitor.
Even if you’re well organized, administrative tasks may be taking too much time away from your core business and sapping your entrepreneurial energy.
What can you do?
Look at your pain points to determine where you need help. Online scheduling software can automate reminders, and a virtual assistant can handle appointments and calls. If billing, payments, collections, and accounting have become stumbling blocks rather than engines that propel your business, consider a bookkeeping service to get your records in shape.