Small businesses are particularly vulnerable in tough economic times. It is essential to be proactive and plan for potential shortfalls in cash flow to ensure that the business can continue to operate.
When sales are slow, there are still overheads and salaries that need to be sorted. Pre-planning and being proactive can help you weather tighter economic periods and allow you to continue to thrive.
Make sure you have a clear picture of your payroll, and any other planned expenses that will need to be accounted for.
If there’s even a possibility that there could be a shortfall, it’s essential to meet this head-on. Whether this means talking to your supplier or creditors to figure out an arrangement, or compromising on other business outgoings, you must make a plan to ensure that the business, or your staff, won’t suffer.
Minimise the stress of cash-flow
Invoice early - Send any invoices that you can, and in advance if possible. Perhaps consider whether you have any regular clients or customers that you could offer a retainer or similar deal to if they book services or make a purchase from you in advance.
Chase payment - Use this opportunity to chase up any outstanding payments. Strong communication and relationships matter - talk to clients and chase invoices.
Talk to suppliers - A little honesty can go a long way. Perhaps they can extend a line of credit for your payments to them. In most cases, a good supplier will appreciate a little bit of honesty and communication and rather offer a little flexibility to keep an ongoing business relationship.
Review Inventory - Can you find a cheaper supplier locally to avoid the shipping costs or discuss alternative products that allow you to reduce expenses?
Review your costs - It’s also a good idea to do a general review of expenses. Business costs can creep up, and it’s a great idea to make a time to check on your expenses regularly, no matter what your financial situation. Review all of your regular payments and subscriptions as well as upcoming costs. There may be travel, functions or purchases which you can decide on an alternative approach to.
Talk to the bank - If cashflow is tight, make sure you have conversations early so you have everything in place to see you through. They may also be able to offer some solutions and support.
Overall, pre-planning and being proactive are essential for small businesses to during challenging economic conditions.
HelloLedger can help you implement strategies to protect your business for the long term and help you alleviate cashflow worries.