Running out of the money is a disastrous event for business. Several new businesses fail in the first moths after opening because they lack the discipline to follow a money management plan. Therefore, they are unable to buy products or pay suppliers to meet the costumers’ needs.
1 Write a money management plan
Write a money management scheme in which you describe in detail, how much does your business need to run, how much do you need to earn daily and weekly. Register all the money you receive and the next payment you have to make by due date and amount.
2 Spend the minimum or just pay the essential
Every dollar that your business earns has to be invested to ensure your business success. Don’t spend any dollar on new decoration or luxury stuff until your business makes more than 20 times its operational cost.
3 Hire the best employee
Your employees are the heart of your business hiring the best employee for it will save you money by preventing wasting materials and wrongdoing your process. In consequences, you will save money and your employees paid time will work better for your business.
4 Keep your payroll to the minimum
Hire the minimum employee number. You must keep your business operational cost to the minimum, even when it makes significant profits.
5 Offer discounts or promotions for earlier payments
Providing a discount or a promotion for paying earlier always increases the cash flow from those who want to take advantage of it. Additionally, even after the discount, your business will make more money if it can increase its production.
6 Avoid net term longer than 15 days.
Giving credit boosts your sales, but you need to collect receivables as soon as possible. You need to be careful to guarantee your business operational money is always ready 10 to 15 days before needed. You should not offer net terms longer than 15 days. Let the financial institution manage credits.
7 Create an maintain a cash reserve
After your business star breaking even, you must open a saving account as a cash reserve for any operational cost emergency. You need to have a least the operational cost of your business for a couple of months.
8 Get a business loan
Opening a credit line or getting a business loan could guarantee enough money to keep your business running smoothly during economic hardship. Talk to your financial institution and be ready before you need it.