Circulating Funds and Cash Flow Management: Getting Money Into the Ring

Cash Flow Management, Industry News | 0 comments

5 Ways To Keep Cash Flow Pumping by Brad SugarsKeeping a fund that continually circulates around the business is important so you can keep it running without shelling out more and more cash each month. With a good amount of money, you can help make the business run on its own and create wiggle rooms for more investments.

Running your own business is risky, but if you plan things carefully, you’re sure to come out successful. When you’re just starting up, Entrepreneur writer Brad Sugars says that you should first find a way to get more cash flowing into your bank account.

To get consistent cash flow, he writes that you should never give discounts because doing so will not get you more money. It creates a loss instead because you are sacrificing profit to give your customers a sweet deal. If you truly feel that a discount can help you, then calculate costs and make sure that you’re not giving away more than the amount of your expenses.

Instead of discounting, Sugars suggests creating bundled packages:

Even though discounting isn’t always recommended, adding value is. By creating bundles of products or services, for instance, businesses can inject tremendous amounts of perceived – and tangible – value into their offerings for very little cost.

A good example is the maintenance agreements some car manufacturers are now providing with the purchase of a new car. Not only does that type of offer help allay a major concern or frustration customers have – paying for a breakdown or time lost at the dealership – it also offers real value in terms of limiting out-of-pocket maintenance costs.

Put more simply, you can increase your price point initially since you’ve helped lower a perceived risk by offering something as basic as a guarantee.

Once you feel that you have enough cash going around, the next step is learning how to properly manage cash flow. You have to track and handle the movement of funds within your business. An example is knowing when to allocate accounts receivable because setting them aside for something you need right away, like payroll, can be risky if there are delays.

cash flow managementAlthough keeping a detailed record of all of your business’s finances can help, you could also try a cash flow management software such as those created by Cash Flow Mojo. Such program is designed to help you determine your company’s stats, create budgets and reports, keep track of finances, and plan for investments.

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