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Super Charge Your Business Cash Flow – 7 Essential Strategies

Updated: Feb 16

Today, I'm thrilled to dive into a topic that's essential for your success: cash flow. I've been working closely with one of my clients, Ellie, who owns a delightful coffee shop. We've been implementing strategies to turbocharge her cash flow, and I'd like to share some of these powerful insights with you.

The 7 Fundamental Cash Flow Strategies

Let's begin by revisiting the seven fundamental cash flow strategies that can truly transform your business:

1. Increase Your Prices: Elevate the value you provide and charge what you're worth.

2. Sell More at Higher Prices: It's all about maximizing revenue per transaction.

3. Reduce Costs of Goods or Sale: Streamline your operations to boost profitability.

4. Trim Overheads: Identify and eliminate unnecessary expenses.

5. Accelerate Client Payments: Get your money in the door faster.

6. Optimize Inventory and Work in Progress: Keep your resources lean and efficient.

7. Extend Creditor Payments: Stretch out your supplier payment terms strategically.

Action Step: Review and Understand the 7 Cash Flow Strategies

  • Before we delve deeper into each strategy, take some time to understand these seven cash flow boosters. Assess which areas your business could benefit from the most.

Cash Flow Booster #1: Increasing Prices

Now, let's zoom in on our first cash flow booster: increasing prices. I often hear business owners say, "We can't raise our prices!" But what if we shift our mindset and consider what's possible? That's where the magic begins.

The Price Increase Impact

Imagine you're selling a product for $100, with a cost of goods at $30, leaving you with a gross profit of $70. If your overheads amount to $50, your net profit is $20, or 20%. Now, what if we raise that price by just 10% to $110? Your profit jumps to $30. That's a 50% increase in profit against the original … from a mere 10% price bump. It's like finding a hidden treasure trove in your business.

Action Step: Calculate Potential Profit Increase

  • Calculate how a small price increase could impact your business's profitability. It's often more significant than you think.

Smart Segmentation

So, how do we go about increasing prices? It's all about smart segmentation. You can either raise the prices of select products or services or go for an across-the-board increase. Most of my clients prefer the former to minimize risk.

Action Step: Analyze Segmentation Opportunities

  • Identify which products or services are ideal for a price increase and which should remain unchanged.

Leveraging Perceived Quality

If your business is lagging competitors, we may need to tidy things up a bit first. But if you're on par with the competition, a price increase can set you apart. Customers often equate quality with price, so it's a perception worth leveraging.

Action Step: Assess Competitive Position

  • Evaluate your business's competitive position and determine if a price increase can be a strategic advantage.

Our Process

Here's my process: I conduct a comprehensive financial analysis of your business, generating a detailed 20-page report. We discuss the key findings and identify the strategies with the most significant impact on your business in the shortest possible time. This includes projecting your new profit position, the inflow of cash, and the increase in your business's overall valuation.

Action Step: Seek Expert Guidance

  • Consider consulting with a financial expert to conduct a thorough analysis of your business and develop a customized cash flow strategy.

Your Cash Flow Toolkit

Together, we'll select the best strategy from our cash flow toolkit, which includes:

  1. Increasing Your Prices

  2. Selling More at Higher Prices

  3. Reducing Costs of Goods or Sale

  4. Trimming Overheads

  5. Accelerating Client Payments

  6. Optimizing Inventory and Work in Progress

  7. Extending Creditor Payments

We'll chart the easiest path forward, tailored to your unique business needs.

Action Step: Create a Cash Flow Improvement Plan

  • Identify which strategies from the toolkit are most relevant to your business and create a step-by-step plan for implementation.

Thriving Through Cash Flow

Remember, improving cash flow isn't just about surviving; it's about thriving. So, join me in the upcoming episodes, where we'll dive even deeper into these cash flow strategies. Until then, keep innovating, keep growing, and keep prospering.

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