There are numerous cash flow ideas, but here are ten to help you get started and generate cash flow while generating a customer list that will serve as a foundation for repeat business.
- Become a marketing genius: Marketing is married to selling. Marketing is by far the most important ingredient in success. Most accountants will show you that marketing and advertising fall into the expense side on the balance sheet and when you are signing cheques, it certainly feels like that. Yet, when it’s done effectively, marketing is your greatest asset. If you were to run a R10 000 advert that returned you R20 000 in profit in a matter of weeks, then you’d be doubling your money. Marketing is only an expense when it’s done incorrectly. It is wise to spend 50% of your time in this area of the business.
- Primary service or product: One of the easiest ways to boost cash flow and profit is to drive your customers to your bestselling (or primary) product or service with the highest profit margin. Don’t focus on the price, relentlessly sell the benefits.
- Deposits or pre-paid contracts: If you are in a service business, reasonable deposits are a great way to generate cash flow upfront. However, you need to deliver on the back end, or else you won’t be in business for very long. If you have a product-based business, you could also do the same with pre-orders, with a percentage of the final sales price going to secure the order or a certain delivered-by date. The key here is to get creative, as there are endless possibilities in making this model work for you.
- Periodic “closed-door sales” for new customers or loyal customers: This is a great way to literally create a captive audience for your product or service. Set it up as a workshop, class or demonstration in an environment you can control and with a sales and pricing process you can direct. For this event, “sale” doesn’t need to mean “discount.” Offering an exclusive, limited-time purchasing period for new customers (and in the future for loyal customers) is an incentive for them to get the latest, greatest, best or most innovative products before everyone else.
- Shorter payment windows: Depending on your company, you could combine upfront payments with shorter terms, especially if you are in a service category. It’s best to position the shorter terms as an offer with something to act as an incentive for paying early like a small gift or some other kind of added-value offer. You could also position this as both a thank you and an incentive to keep customers consistent with shortened terms.
- Loyalty programmes price: Establish a loyalty programme and add enough value so you can charge a nominal joining fee. While there may be some initial costs upfront for producing loyalty cards or customer tracking, the extra cash generated over time ends up going straight to the bottom line. Not only can you create a highly targeted list of better qualified customers, but this is a simple way to easily generate cash quickly just by asking for it.
- Carry exclusive lines: By stocking items that can’t be purchased elsewhere you can charge higher than normal prices. The advantage – your customers can’t shop around. This is a great way to avoid C and D-grade customers that generally cost you money instead of making you money. Use the uniqueness of your product as a selling tool. People love to have something others don’t.
- Offer big customers a shareholding: If a customer gives you the majority of your business, it makes perfect sense to make sure you never lose their business. Once you have your best customers as shareholders, they will always buy from you and they will probably insist all their friends and contacts do too.
- Stop discounting: This means that your sales will return the highest possible profit margins. Rather offer additional incentives such as free home delivery to assist in closing the sale. Focus on the benefits and quality of your product and not the price. Don’t be afraid to lose the sale.
- Commission only sales team. One of the greatest burdens on any business’ cash flow is sales teams. The safest way to run a business is to pay on performance; but the commission needs to be compelling. It’s also a great way to test people as they usually leave voluntarily if they don’t perform.
Once you get your company up and running, you can expand on these strategies and also look to increase your value adds at different buying, sales or customer contact points along the way. The key is to test and measure what works and what doesn’t, because no strategy will work perfectly for you every time. If you market correctly and test and measure everything you do, keeping your winners and killing your losers, you will eventually find your cash flow “sweet spot.” That will lead to larger increased cash flow, larger profits and a healthier, more successful business over time.