Getting Through Crisis by Managing Your Cash Flow
Managing cash flow during a time of crisis is both challenging and frightening. With uncertainty, it is difficult to manage a business because so much relies on a forward-thinking plan. Consider some of the following ideas to help your business maintain crucial cash flow during a crisis.
Revisit Operating Costs
Depending on the type of business you run, operating costs can take up a large portion of your expenses. Whether you run a restaurant and receive large deliveries every day, or you produce clothing that comes in a variety of colors and cuts, there are ways you can maintain cash flow by cutting back. Consider taking off less popular menu items, offering fewer colors, lowering inventory, or producing simpler items. The majority of cash flow comes from popular items, so focus your attention on those items your business produces, and leave the more complicated goods for a more secure economic time.
Maintain Supply Chain Communication
Several businesses outsource their manufacturing, so if traveling and shipping becomes limited, that can greatly affect your cash flow. Maintain a strong sense of communication with your supply chain. Similarly to cutting operating costs, perhaps you could limit the amount of outsourcing your business requires to run on a day-to-day basis. Lowering the supply chain costs can divert funds into other areas of your business, such as paychecks, operating bills, and rent.
Return To The Basics
Try to remember how difficult it was to get your business off the ground long before the crisis. Ask yourself what you did to get going and build cash flow in the first place. During a time of economic crisis, you may need to return to those basic principles. Decrease the staff; limit working hours; apply for a small business loan. If you are a new business owner during an economic crisis, try to formulate a growth plan without investing too much cash in an untested product.
Be A Chief Financial Officer
Put yourself into a position of strength when it comes to your cash flow. In all departments and areas, think like a chief financial officer. Business owners wear many hats, so in an economic crisis this pressure will only increase. Create several plans to help your cash flow remain stable. As the crisis continues or unfolds over time, plans will also need to change.
Creating several plans to increase and maintain cash flow during a crisis will ensure the ultimate survival of your business, which is the goal of every business owner.