Focus on Cash Flow

Did you know that a company can be profitable and STILL go out of business? Your company can look profitable “on paper” but not have enough actual cash to pay operating expenses like your, payroll lease, and utilities. Nothing kills a business faster than a lack of cash flow. In fact, it's the #1 reason that small businesses fail every year! Here are four things to focus on to keep that cash flowing in!

1. Maximize Your Income

The best way to have a healthy cash flow is to get that income up! You need to make the most money that you can. So determine what services are giving you the best profit margin and focus on THOSE! You also probably need to increase your fees - almost every small business just does not charge enough for their services. And if you're charging by the hour, are you charging for EVERY hour that you spend on a project?! If not, you are leaving a lot of cash on the table.

2. Get PAID

Do you spend a lot of time chasing payments?! That can really hurt your cash flow! Set a system for getting paid that will help you keep money flowing in when it should. For example, ask for a portion of payments up front. Do not start the work until you have the money owed to you at that point. Do not continue to work unless payments are being made on time. The worst thing you can do is pay for subs and your team's time without having your clients' money in hand to cover it. Treat your business like a BUSINESS. Holding a credit card and being clear about when it will be charged is another great way to ensure you aren't constantly hearing that "the check's in the mail." And you can always have your bookkeeper be the one to ask for payments so you aren't the "bad guy" in that equation.

3. Review Regularly

Do NOT put off your financial reviews and meetings with your bookkeeper. You have to know where your cash flow is at any given moment. The only way you can do that is to stay on top of your financial reports, reviewing them every single week. (* Set your calendar reminder now!) You want to see your incoming payments, your expenses, and what cash is available right now. You should also have an emergency fund to take care of any unexpected problems. 

4. Look Ahead

The last thing you ever want is an unexpected "surprise" of a lack of income. Keep your eye on your client pipeline at all times so you know what money is expected and when. (* Set your calendar reminder now!) Be sure that you are marketing your services at all times, especially if you see any lean months coming up. If you can stay ahead of those peaks and valleys in your income, it will definitely keep your cash flow in good shape.

Financial health is SO important to a small business, so you definitely need a system in place for handling your finances. In fact, it's one of my top 5 essential business systems. Download my FREE guide here to see what the other 4 processes are!!

Check out more design business tips and tricks

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How to Make Your Goals Personal

How to Make More Money

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