You’ve developed a stable customer base, your products or services are selling, and you’re breaking even or even managing to be profitable. Some would say you’ve achieved success as a business owner. You should be proud of everything you’ve built and accomplished. But you’re still looking around and you think there is more potential. Growth is the next stage of your business development, but you don’t know if you have the money you need to invest. Here are some tips for finding a bit of extra cash you can sink back into your business.
Review Your Pricing
As you were building your business, you likely priced your products and services to draw in new customers by beating out your competitors. Now that you’ve established a solid reputation, it might be time to rethink your pricing strategy. Do some research into average pricing for your industry and adjust your prices accordingly. Higher prices should bring in more cash flow.
Review Subscriptions & Memberships
If you’re part of a professional organization or have a membership in a local business organization, consider the value you are receiving for your fees. You may be spending significantly more each year in costs and fees associated with membership than you are receiving in membership benefits. Examine each subscription and organization membership to see if they are worth the cost.
Determine Optimal Hours of Operation
If you open your store at 9AM, but only average $30 in sales each week before 11 AM, then you are spending a significant amount more to remain open for those extra two hours. Although sales are important, they are not the only determining factor for the optimal opening hours. Pay close attention to store traffic and calculate your conversion rate. If the conversion rate is low, but traffic is extremely high during the first two hours of opening time, it is reasonable to consider hiring experienced associates or organizing additional sales training for the staff.
Negotiate Insurance Prices
Many people don’t realize they are paying more for insurance than they should. It’s almost always worth it to speak with several insurance agents to see what coverage options are available and if you can get lower rates. It’s not uncommon for agents to upsell you on coverage you don’t need. Check with your local government to see what your requirements are and adjust accordingly. It can save you hundreds of dollars a year if you can find a better rate.
If your business is doing well and continued growth will increase revenue, it may be acceptable to apply for a business line of credit. It’s a great way to get money to invest in your business, but you do need to be certain you will have the cash flow to make your payments later.
Develop Effective Inventory Management Processes
A good inventory management system helps you see what your product flow is, and you may learn some surprising things. Many people have cash tied up in excess inventory, some of which may not sell. These items are often sold at a discount later, losing money. Being able to track which products are being purchased and which ones are not can help you tweak your ordering and save money by not stocking items you aren’t likely to sell.
You can reduce your overhead costs in many ways. Renegotiating vendor contracts for things like office supplies can be very useful. If you change your operating hours, you will save on various costs associated with being open, like payroll and utilities. Invest in comprehensive software that manages inventory, payroll, vendor contracts, sales and much more to simplify your business management.
Finding places to cut costs is one of the easiest ways to find some extra money to sink back into the growth of your business. Follow the tips above to save cash and reinvest in your company.
About the writer: Alex Lawson is a Financial Team Leader and a blogger, working together with other experts at Brighter Finance. Whenever not working on another project or helping customers with their financial issues, Alex may usually be found online, reading money-related blogs and sharing his tips with other experts.
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