Revenue is vanity, profit is sanity, and cash is a reality.
Cashflow is the key to running a successful small business, but it’s the thing that many small business owners struggle with the most.
In my opinion revenue is vanity, profit is sanity, and cash is a reality. This means it’s time for business owners to put themselves first.
On last night’s episode of Let’s Talk Business, I shared a few more of my tips for small businesses to boost cashflow…
Guru tip 1 – Put profits ahead of revenue by offering fewer products or services at higher profit margins.
Guru tip 2 – Don’t be afraid to get a loan to solve short-term cashflow problems, but if you do, make sure you don’t put up bricks and mortar as surety.
Guru tip 3 – If you can’t get a loan, get creative by introducing a post-purchase payment system like Afterpay or Splitit to increase your up-front cashflow.
Guru tip 4 – Cut your liabilities by employing sub-contractors rather than employees. This allows you to avoid leave entitlements and workcover, though you will still need to pay superannuation to ongoing sub-contractors.
Guru tip 5 – Take a leaf from Uber’s book – create something from nothing by sub-letting any spare desks or areas within your office. You’re paying for them already, but if you’re not using them, someone else might as well supplement your outgoings.
Guru tip 6 – Restructure your business to allow third parties to purchase shares, bringing in capital and increasing cashflow.
A lack of cashflow doesn’t need to be a crippling blow to your business. With a bit of creativity, you can boost cashflow and make it through the leanest of times.