Read masses of books and articles on the subject of achieving success in your small business if you like, but there is one thing that no matter what field you are in you will need to survive. That thing is money, especially a good cash flow, and if you don’t get this aspect of your business right, it will sink. So read on to find out how to manage and keep the flow of cash in your company stable, as then you can stay afloat no matter what happens.

Startup stage

Everyone knows that to make money, you have to spend it first. So you are going to need some funds to get your business off the ground, despite what all those startup on a shoe strings posts say.

The things you will need a decent cash flow for in the early stages include the development of your product or service, basic overheads like a premise, materials, and staff, and funding for marketing and branding.

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In particular, the cash for the development of the product or service is vital because the strength of this will largely depend on the success of your business overall. That is why it’s crucial that you don’t go with the very first idea that pops into your head. I’m not saying it isn’t a great idea, it’s just that it’s likely that you will need to work on it, and refine it before it is ready to be launched. This, of course, will take funding to do.

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You can use our own capital to fund this, or you can seek investment from others. One choice is to offer up a share of your company for some initial capital to get you off the ground. Another is to access money through a peer to peer lending service. Although you do need to be aware that you will have to pay this back on their terms and their schedule.

Up and running

Once you are up and running cash flow can also be an issue, primarily if you are working on the tight margins small business often do. This is because if you have any unexpected expenses like extra bills, or large refunds to issue it can leave you without enough money to get everything else done that month that will keep the wheel of commerce turning. This can then have a knock-on effect and cause problems for your income for the next month and so on, making it more likely that your business will sink rather than keep afloat.

So what can you do about this? Well, there are three main things that are useful for effectively managing your cash flow once you are up and running. The first is having some funds tucked away for a rainy day or an emergency. Something that means if you do get into trouble you don’t immediately find yourself in debt.

The second is to have a prearranged line of credit with your lender that you can access with the minimum of hassle. This is a great idea because it is quick and convenient and you only pay interest on the figure you borrow, so is a sensible solution for your business.

You can also use a short-term loan, particularly useful for folks with bad credit. Although with the new guidance being placed for regulating the cash lending market, the opportunity may not be around for long. So take advantage of them now while you can!

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Lastly, something that can really help to keep that cash flow moving is to develop a positive relationship with your customers. Especially the commercial ones as this will allow you to prompt them for payment and receive their fees on time. Something that can help you keep the cash you are owed flowing into the business.  

Diversification and expansion

Lastly, don’t forget that cash flow can be a real issue if you are looking to expand and diversify your business. This is often because the need for this is lead by the fact that what you are doing right now isn’t getting you the revenue that you desire. Therefore you are in a situation where you are struggling for money, but also need to expend more of it to get to the pace that you want.

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Some companies reinvest the profits that they have made to deal with this situation. Although it can be wiser to seek outside investment for diversification and expansion. Also, don’t forget the power of crowdfunding is where you can utilize the consumer and fan base you already have. Something that is often a useful and untapped market that can help your business stay afloat in difficult times.