Increase Your Cash Flow in 60 Days - Part 2
Renee Daggett • February 15, 2017
Every business at some point struggles with cash flow and lack of profits.
Part two in a series of three on increasing your profits and cash flow in 60 days:
Every business at some point struggles with cash flow and lack of profits. The period can be short, or it can be long. Either way, it may feel like you are drowning, struggling to cover expenses.
Running a business is challenging. It is not for the faint of heart or the fearful. It is like a rip tide. Business owners are swimming directly to shore and they are exhausted. But swimming parallel to shore is counterintuitive at first. What we are recommending will feel the same way!
Yet, someone must do the swimming if there is going to be rest and safety. It all starts with the leader. The good news is that there are things you can do in the next 60 days to change the numbers on your financial statements. Only you can make these changes. Time to grab your swim trunks!
People (Customers/Clients)
Most people think that to increase their profits they need to increase their sales. WRONG! Or a client that you sell a bigger widget to is better. WRONG again.
Make a list of your best 10 customers/clients. List total income you deposited from them and list out every little cost. What profits did you earn from each of these customers/clients? Some of your best clients can be costing you more than you think. Bigger is not better. Smaller does not mean not profitable. Know which clients are the most profitable. These are your stars that you want to foster a long business relationship with. Know which clients are the least. Some clients if you can offer them another product/service, they could be good clients.
Yet, the business has a big say in retaining good, profitable clients. Here are some tips:
1. Build relationships
2. How you handle the client after the sale is more important than before the sale
3. Deliver value consistently
4. Solve problems for your customers/clients
5. Go beyond what they expect
6. Check in with them after the sale
Have you heard of the 1/3 rule? 1/3 of your current customers/clients are providing you adequate gross profit. 1/3 of your customers/clients are at a break even point. 1/3 of your clients are draining your business. If these numbers are true, then 67%of your customers/clients are dragging your business down. Just by firing your least profitable customer/client, you can increase your profits! If you remove the dead wood, it will unlock your profits overnight. Then for the middle 1/3 you can either drop them or convert them to profitable sales. Start making your list!
If you don’t expect your mechanic to drive your car for you, don’t expect your accountant to make business decisions for you. With that said, we can only make recommendations. It is up to you to TAKE ACTION. Grab your towel…you’re gonna get wet!
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