Is your business leaking money on low return-on-investment items? Do you sometimes look at your account at the end of the month and wonder how you will make it to the next? Then it is time to conserve your cash so that you can build a strong and prosperous company in the future.
Habit 1: Set a finance goal
Your first finance goal should be to break even as soon as possible. When you have achieved this goal, you can consider looking to create goals where you will make a profit from your business. This will help you to build a business and lifestyle which you have dreamed about. By writing a goal down and putting it in a place that will be constantly visible will help you keep on track with conserving your cash to achieve your ultimate business goals.
Habit 2: Plug the leaks
Do an expense audit of everything you spend money on in your business. When you audit your spending, consider the return on investment for the money you are spending. If the return on investment is low, then consider ways to cut the spending or decrease the spending in that area.
Habit 3: Automate your savings and emergency fund
Many small businesses that have struggled in the past year or so have not had a savings or emergency fund. It’s crucial to set up automatic payments into these accounts so you are not tempted to spend this money unnecessarily. By creating a savings account, you will be able to buy the new tools for your company when the need arises. You will also be able to think about what you want to purchase and truly know if that is what you would like to spend that money on. As for the emergency fund, this will help you when you have an unexpected hiccup in your business. The emergency fund will help you ride out the problem until you can find a better solution.
Lastly, calculate which percentage of each sale should go to the necessary things of your business, the wants for your business and the emergency fund. You can do 50% for necessary, 30% for an emergency fund and 20% for wants or savings. This will help you to build a sustainable business from day one.
Habit 4: Track your cash every day
Create a cash flow spreadsheet where you can track your income and expenses. This spreadsheet will help to keep you aware of how your business is doing and you will have real data to use when making decisions about your business.
Habit 5: Give customers the best option
If you want to be paid on time, make sure you send the invoice out as soon as you have completed the job. If the job is intricate or a special request, ensure you get a deposit to secure a commitment from your customer. Ask your customers how they prefer to pay you and choose two of the most popular ways and make them available to your clients. Payfast offers a wide variety of payment options that you can make available to your customers. Lastly, if a customer queries an invoice have processes in place to resolve it quickly. By following these five habits, you will start to conserve your cash and build a business which can stand the test of time. Go out there and build one little habit at a time.
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