Cash flow the critical life blood of a business,
especially in the startup
If you don’t have enough money to support
daily operations the business will fail.
Cash flow is a measure of your business’s
It is the difference between the amount
of money coming in and the amount going out.
Cash flow positive menas that you have
more money coming in than going out.
Being cash flow positive means you have
enough money coming in to pay your bills and
keep the company afloat.
Cash flow positive should be the goal of
every small business.
These are the top 10 things you can keep your
small business cash flow positive.
KNOW THE BREAKEVEN POINT:
Before you can strive to achieve positive cash
flow you first have to know what the breakeven
The break even point is the point at
which you’re not spending more money than you’re
GET PAID IMMEDIATELY:
When a customer makes a purchase get paid
Avoid giving customers credit or grace
time to make payments.
When you give customers credit or a grace
time to make payments there is always a certain
percentage of them who will not make payments
and some will make late payment.
This will have a negative impact on your
Make them pay at the time of purchase.
Get your suppliers to give you extended pay
terms such as net-30, net-60 or net-90.
This means that you will have 30, 60 or
90 days to make payment for supplies after you
This gives you a grace period where you
could ensure that you have the cash flow to pay
for them and does not negatively impact your
Do things to bring in more customers and make
those customers buy more.
You can offer discounts, sponor events,
product sampling, give aways, stay open on
holidays, extend operating hours, etc.
LINE OF CREDIT:
Establish a line of credit that you can tap
Having a line of credit that you can tap
into gives you access to money that you can use
to grow the business without faltering on
payments or having to go into debt.
A line of credit lets you use only the
amount you need to and pay it back immediately.
If you didn’t have a line of credit and
immediately needed cash to pay a suppliers, you
would have to get a loan which puts you in debt
or you could end up with making a late payment
to your suppliers which comes with additional
The line of credit will keep you free
from incurring these costs and maintain positive
If your business is the type where you have to
do the work before you get paid you need to
focus on billing the customer quickly and
obtaining payment immediately.
With these kinds of businesses you want
to make sure that the customer pay as the work
progress so that you don’t end up footing the
entire bill if the customer renigs on paying
Give the customer an initial estimate and
compell the customer to make phase payments as
the work progress.
Get them to pay 25% up front, 25% when 25
percent of the work is completed, the next 25%
when 50 percent of the work is completed and the
final 25% when the work is completed.
Pre-selling is getting customers to pay before
the product or service is delivered.
This puts the money in your hands that
you can then use to actually develop and deliver
the product or service.
This prevents you from having to seek
investments in order to finance the business.
Initiating a “Layaway Program” is one way
to get customers to pay up front before the
product is delivered.
If your business is such that you can
employ this method you should use it.
GET CUSTOMERS TO COME BACK:
The best source for generating more cash flow is
from the customers you already have.
If you can get those customers to come
back and make more purchases it will
significantly increase your cash flow.
Get them to come back by establishing
loyalty programs that gives them special
discounts for being loyal customers.
The more they buy the more discounts they
They are already committed to buying from
you anyway, so it’s an easy sell.
Offer a product at a low price as a way to lure
the customer to your shop and induce them to
purchase items that cost more.
For example, you can $1.00 beer at happy
hour in the hopes that the customer will also
purchase other drinks (rum & coke, etc.) at the
When customers walk into your store to buy
something, attach another item to that product
that will make them believe that they are
getting more for a little extra cost.
If you’re a car wash business offer the
customer inside cleaning in addition to ourside
cleaning for just a little more.
If you’re a car repair business offer to
customers’ cars after completing the repairs,
for just a little more money.