Cash flow is one of the most vital facets of business for entrepreneurs to manage. If you don’t keep a close eye on how much money is coming in versus what’s going out, you can end up in financial distress and may have to close or reduce your organization or sell it off to someone else.
Many people think that because eCommerce stores can be started on a shoestring budget and don’t have to pay for expensive rental premises, cash flow won’t be a problem. However, that’s not the truth. You must be vigilant about managing finances and, in particular, the flow of cash. Follow a few tips to keep your online store out of trouble this year and beyond.
Track Incomings and Outgoings
Firstly, you can’t manage your cash flow effectively if you don’t know what’s happening with your business finances. Keep a close eye on the incomings and outgoing so you can understand your venture’s financial position and spot if issues are arising. It pays to examine bank accounts and credit card statements weekly, so you know where things stand at all times.
Don’t leave it too long before checking these things, or you could suddenly find yourself in a tough cash flow position with fewer options to sort things out. Examining income and costs often will help you to avoid being caught out with a significant cash shortfall.
Find Additional or Better Revenue Streams
A top way to make cash flow worries a thing of the past is to continually look for ways to bring in more sales to your business, especially those that provide nice profits. Think about how you might find additional or better revenue streams for your online store to get money flowing in.
It helps to use a trusted web analytics tool on your eCommerce store to get more of an idea of how shoppers use your website and which pages hold the most interest. Tracking shopping behavior will give you insights into where to focus your attention product-wise, and how you might land more upsell and cross-sell orders.
Some other ways to increase sales include running promotions for loyal customers, selling products on other platforms, such as marketplaces like eBay, and running competitions, with the condition being people have to buy something to enter. You could also target a new customer demographic or bring on new product ranges or even subscription services. Consider new marketing avenues plus referral programs and loyalty programs, too.
Work Out Better Deals with Suppliers
Next, reduce your costs and make cash flow better by getting deals from your suppliers. It’s always worth chatting with regular vendors to see if they can provide more favorable buying and shipping terms once you hit a certain point of business with them. For instance, some companies might be able to help you save cash by providing free or discounted shipping on orders.
Others might be willing to give you longer to pay for goods, such as 30, 60, or 90-day terms versus payment upfront or in the first couple of weeks. You may be able to negotiate discounts on repeat buys or orders over a certain dollar value, too.
Or, some suppliers may be open to providing you with bonus items once you have purchased a set amount of times from them or reach an acceptable order value. It’s always worth asking vendors if there’s anything they can do to sweeten the deal.
Look for Other Ways to Cut Costs
It pays to seek out other ways to cut your business costs, too. The less you have to fork out in monthly fees for things, the more cash you’ll have available to pay other bills and stay on track. While it’s great to minimize big expenses, remember that finding ways to cut small but regular fees can add up to significant savings, too.
For example, you could find a better deal on packaging and shipping costs, office supplies, or utilities or telecommunications rates. You might be able to use apps or other software to complete some tasks rather than paying people to do them, and you might notice that you’ve been spending money on marketing campaigns that don’t bring in a good return on investment and can stop as a result.
Many online store owners find that they can cut costs by better managing inventory, too, by avoiding tying up funds in stock that doesn’t move or that does very slowly. You might decide, too, to start pre-selling some items rather than buying stock first to test goods you’re unsure about.
There are many areas where you might cut costs, increase sales, or generally manage your cash flow more effectively. Be open to checking multiple operational factors for possibilities, and you should start noticing improvements in cash flow balances in no time.