Regardless of how well you run your business, the unexpected is bound to happen and that, unfortunately, means that sometimes you can run out of money or run short of money.
When you do, you should be able to get over it with the help of these three tips:
Determine The Cause of Your Cash Shortage
If you can’t determine the cause of your predicament, you can’t get the solution and prevent a reoccurrence sometime in the future. One of the most effective steps to take when your small business is experiencing a cash shortage is to determine the root cause of it and provide suitable solutions.
Increasing Your Cash Inflow
When you run out of cash the best solution is to try to get as much cash as possible. But how do you go about that? The first thing you could do is try to get a lot of new orders coming in. You can review your marketing and sales strategies to help make this process a smooth one. You should also ensure that you don’t have too much money tied down in inventory, credits to customers and delayed payments. If this is already the case, you can create an incentive for your customers to pay you on time, and reduce the credit you provide to customers.
Reduce The Cash Leaving Your Business
When you’re in a cash crunch, you want to be able to reduce the amount of cash going out of your business. This can be done by reevaluating your business costs so you can cut off unnecessary expenses. To stop more money from leaving your business, you should renegotiate your terms with vendor explaining your current situation so you can get a break or otherwise pay in instalments.
Look for Short term Financing
Sometimes, your best efforts at getting over your cash shortage may not work and that’s why you could do with some external help. A little cash injection in the short term can help give your business enough time to find its footing again.
Short term financing can come from a variety of sources; you could sell some assets that are no longer important to your business, secure a loan from your family and friends, banks or other lenders. But the most important thing is that the fund you get must be spent well to help your business overcome its financial difficulties not put it in more.