The economy is changing.
Customers are spending less money these days and businesses are seeing their sales decline.
What can you do to stay healthy even if sales are down?
Here are 5 steps to improve your cashflow so you can continue to grow.
1. Cut expenses smartly.
Divide your expenses into 3 categories. The first category is the expenses that are a necessity to the business, you cannot run your business without them. The second category is the expenses that are helpful for the company but not necessary, and if you take a break from them for a year the business can continue to run. The third and last category is expenses that are not needed at all and can be eliminated for good. Start cutting expenses from the third category and up.
2. Build up your cash reserves.
When you are done reducing your expenses, you should find more money in your business, and now is the time to build up your cash reserves. This will help ensure that the money isn’t spent elsewhere that isn’t important.
3. Budget and forecast your cashflow.
To stay on top of your game, you need to have a clear picture of what’s going to be happening in your business. Try creating a few scenarios of different amounts of sales coming in and what that will look like for your company. This will make you prepared to take the right actions as the situation unfolds.
4. Learn how to understand your financials.
It is never too late to learn how to read a P&L and understand your financials. Most owners are completely unaware of what is going on with their businesses, but this does not have to be the case for you! Once you can read a profit and loss report you will find areas that you can improve.
5. Start tracking your 5 to 15 most critical numbers.
Use a scorecard to track the five to fifteen most critical numbers for your business every week (e.g., visitors, followers, leads, appointments, proposals, sales, revenue, errors, customer satisfaction, cash balance, accounts payable, accounts receivable). You can do this by simply opening a google sheet and have them filled in every week next to each other.
Implement these steps, and g-d willing you will continue to grow and succeed!
PS. Reach out if you need help implementing these steps in your business.