As a new business owner, no doubt you are spending your days thinking about how to get money flowing into your business to keep your cash flow positive. Controlling your expenses is a proven strategy to improve cash flow, and here are our top tips to do it well.
How can you control your outgoings? Obviously, you can't manage what you can’t see. You need to have complete visibility over all your expenditure so you can create and stick to an effective budget. Begin by writing down all your expenses and costs, item by item. From there, identify those that are helping you make and save money and then go about cutting down on everything else that doesn’t.Below are some of the most common expenses you could consider reducing for better cash flow.
1. Large amounts of stock
One of your top expenses is replenishing your stock. Of course without stock there is no product but by managing your inventory really well you can free up your cash. To make this easier for you, think about implementing an inventory management system that monitors your stock regularly so you are not spending more money on items than you need to. If you don’t have the funds to invest in a tool, you can simply use a spreadsheet. This will help you organise your stock and see their levels before accepting new retail orders.
Predicting orders is another effective way to make sure you carry less inventory. Forecast how many orders you'll receive and allocate sufficient budget for those to avoid overspending and overstocking.
2. Staff
Payroll is another big expense for your business so it's important to regularly review your business operations and the staffing that goes with them. If there are admin tasks that you do repetitively, think about moving them online and automating them instead of having staff do this manually. Remember good staff can be hard to find, so take the time to hire well, and renumerate fairly and you'll have a solid core of employees willing and able to help you grow your business.
3. Unnecessary subscriptions and unused equipment
As your business grows, your budget and itemised expenditure becomes even more important. Even though it might be hard to find the time, regularly review your budget and ensure you eliminate the things that you don’t need anymore. Perhaps you have subscribed to an outdated software that you no longer use? Or there is unused equipment taking up valuable space? By keeping on top of subscriptions and making good use of all your equipment you can cut down your monthly costs or switch to updated software that’s better value for money.
4. IT, HR, payroll, and other admin tasks
Hiring people to do your payroll, manage your IT and find you new staff is important but you don't have to spend a fortune, especially if you consider outsourcing.
Believe it or not, outsourcing is a lot cheaper and it also saves you a huge amount of time as you're no longer having to do the admin work all by yourself. When you outsource your payroll, HR, and IT, you’ll only have to pay when you need the services. This leads to reduced monthly operating costs for you.
Controlling your expenses is one of the best ways to get on top of your cash flow and have a solid financial position. Regardless of how busy you are, it's vital that you check everything you’re spending money on and think of how you can reduce it. One of the most effective ways to minimise your operating costs is to use all the available technology to its full potential.
GET SMART ABOUT TECHNOLOGY
Technology can slash the inefficiencies costing your business time and money because it can automate and streamline almost all of your processes. For instance, by ditching your old-school spreadsheet and switching to a modern-day inventory management software, you can easily monitor your inventory and be able to stock just the right amount. Putting your ordering and payments online, means you don't need to you hire additional staff to look after the retail orders that are flooding in.
Making the most of digital payment tools can also help improve your cash flow because making sure you get paid on time is another way to get your business in to positive financial position. When you give your customers the freedom to order and pay online, through their handheld devices, you’re sure to bring money in faster.
As the leading B2B ordering app on the market Ordermentum is the perfect solution for seamless order management and digital payments. If you're ready to get smart about techonology and save your business time and money then take a few minutes to try out the Ordermentum app here or you can request a free demo with one of our team members.
Keeping your expenses to a minimum doesn’t have to be a drag. You just have to ensure you have good visibility over the things that are costing you money and stick to the budget you have created. This way, you'll be able to stay on solid ground and have a better cash flow.
If you know other proven ways to control your outgoings, we'd love to hear them. Share them in the comments section below.
In the meantime, for more cash flow advice like this, head on over to our blog.