Most entrepreneurs, marketers and salespeople believe they can sell their way out of any problem... until they can't. So many promising companies fail, both start-ups and mature firms, because they don't manage their cash well. It's all fine and good when they are growing sales and the market is steady, but the minute something unexpected takes place, they are in a heap of trouble come payroll time.
Growth guru Verne Harnish helps entrepreneurs and managers address cash flow problems in his must-have business growth bible (Gazelles Inc. 2015). In the book, currently the #1 best selling business book on Amazon, Harnish dedicates more than 20 percent of his writing to managing your cash. You don't have to be an accounting wiz to benefit, in fact, if you hate accounting you need to read it. Here, Harnish shared another great tool with a 7-point plan to ramp up your cash. See if you can bring in more green by manipulating these financial levers.
If your customer base is solid and you provide great value in the marketplace, you can increase the price of your goods and services to gain more cash. You don't have to price gouge, but a small increase can do wonders for your cash flow.
Find creative ways to package your product that will move more volume. If you can sell more units at the same price, you'll immediately increase money coming in the door.
3. Cost of Goods Sold / Direct Costs
When is the last time you comparison-shopped everything you are buying? If you can reduce the price you pay for your raw materials, direct labor and vendors, your cash line will head upwards fast.
4. Operating Expenses
It is likely that you aren't running as lean as you could be. Itemize every expense and cut unnecessary costs today. Reducing your operating costs drains the bank account much more slowly.
5. Accounts Receivable
All those people who owe you money are dragging down your cash. Make some phone calls and send some emails so you can collect from your debtors faster and bolster the bank account.
6. Inventory / WIP (Work in Progress)
If you are a manufacturer, distributor or dealer with inventory, you can reduce the amount of stock you have on hand. Keep just what you need to fill your orders and you will keep the money in the bank.
7. Accounts Payable
In a pinch, you can slow down payments to your creditors. Call them and arrange to pay on longer terms so you have more cash on hand. It's in their best interest to keep you flush and healthy for the long run.