Cash Flow Management Tips for Startup Businesses
As every business person would know, one of the most difficult tasks when starting up a business would be managing healthy cash flow. Even if you have a lot of ready capital, you cannot keep injecting funds into business. At some point, the business should be able to generate even minimal profit, at least even to cover minimal operational expenses. This is why it is important to employ good management practices from the onset of the business. This will help prevent any problems in the future. Here are some ways on how you can manage your cash effectively:
Start your operations small
Even if you have a lot of capital on hand to spend, always start your operations small. If you can start working from home while you start up the company, this would be even better. Always remember that you should keep your operations lean. That way you do not need to spend too much on operational expenses. You can start by getting one or two staff. All of you should chip in with the work and be hands on with all the tasks. Always remember that everyone should be able to multi-task. Once there is a need for an actual office space, then you may search for a place to rent. If your business does not entail customers visiting your office, then you may choose a simple and small office so rent will not be so expensive.
Find loans that offer low interest rates
You will need to get loans at some point. But make sure to read the agreement for the loan terms. The loan have low interest rates and flexible repayment terms. That way should you not be able to make good on some of your monthly payments, then you will not feel the pinch of the interest charges. Always make sure that there are no additional charges to the existing loan. Otherwise you might be paying more than you can afford.
Be prompt with your credit card bills payments
A lot of entrepreneurs often use credit cards to purchase big ticket items for the office as you will be given thirty days to roll your cash instead of simply using cash. Within that thirty days, you will have the chance to generate added income to pay off for your purchases. However if you fail to make payment, you will be charged penalties. Should you be unable to produce payment for your credit card, try to make partial payment. That way it will not be so heavy on the company funds as you would not be making a full payment.
Create deals with your suppliers and contractors
In business, one of the aspects you always need to take care of would be on the side of your suppliers. Should your supplier be unhappy, supply of goods could be stopped and you will not have anything to sell. However there will some instances when you will not be able to purchase in bulk or even pay your supplier on time. Be upfront with your supplier and inform them that you might need to defer payments for a certain period of time. You may even offer to pay them a higher cost for the supplies, just for that period of time to make up for loss of opportunity cost. You could also offer to partner up with them by sharing the revenue with them. That way you would not need to spend so much on paying for supplies.
Be hands on with the entire operations
Even if your strength might not lie in numbers, it is also good to know a bit about crunching numbers. That way you will know costing and other things are done. It is important to know about every part of the business. That way there will always be a check and balance among everyone for effective cash flow management.
All startups would have their share of problems. In fact, you can expect a lot of cash flow issues. However all you need to do is take it all in stride and remember that this is all just a part of the business. Do not let the problem consume you. Once you get the hang of it, managing your cash flow will get easier.
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