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It’s not called running a business for nothing. Starting and maintaining your small enterprise is a high-speed job in itself. Especially when the legwork takes away from client face time. So although every challenge can carry its own reward, it’s wise not to make more work for yourself at the expense of generating more business.
The following tips, brought to you by MasterCard BusinessCard, are a simple aide-memoire to simplifying and optimizing your business day so that everything runs quickly, except for you.
The Secret to Managing Cash Flow
- Regularly review and predict cash flow
Effective cash flow management requires control on a daily basis. Know where money is coming from and going to. Successfully predicting the flow of cash in the coming week, month or quarter avoids sudden shortages and the risk of mismanagement.
- Require deposits especially for first-time
A client willing to put down a deposit is likely to be more reputable. Requiring deposits is a key way to minimize the risk of trading.
- Reduced stock means reduced risk
In sales and manufacturing, the more stock you keep, the more cash you tie up in it. Instead, request your client to pay 1/3 of the cost as a deposit, 1/3 during the production and 1/3 as balance in order to minimize the risk of stocking up and locking up your money.
- Aim for long-term, stable revenue
Sometimes it’s wise to give up a little profit in the short term to establish a long-term relationship that continues to pay. Charging a regular retainer fee brings less money than one-off jobs, but it’s regular income you can depend on.
- Issue invoices promptly
Sometimes projects get put on hold. If this happens for a few weeks or more, send an invoice, clearly listing all the work completed to date, work pending and the projected delivery date. Invoice your client for payment of the completed work.
- Draft a credit application – now
Before you have established a credit record, it’s worth repaying any loan early. When applying for a loan, carefully prepare a proposal. You should also regularly update supporting documents and information on the application so that you can quickly apply when you really need the cash.
- Diversify your business and create more cash sources
Branching out can reinforce your business’s sustainability while opening more ways to bring money in. New streams of revenue are always useful in an unpredictable economy.
- Positive cash flow enhances your profits
Using a business credit card allows you to buy now and pay later, which helps to optimize your cash flow. Take full advantage by settling suppliers’ bills on your business credit card later than you would if paying in cash. Then maximize your purchasing power and seize more business opportunities.
- Don’t mix business and personal expenses
For a clearer view of your business’s financial situation, you need to separate your business expenses from personal expenses. Using a business card with an online expense management system provided by some card-issuing banks, you can simplify your administration. And it makes the task of compiling year-end taxation much easier.
- Acceptance is a wonderful thing
Accepting a payment card frees you from the inconvenience of cash handling while giving you immense flexibility. With credit card systems you can carry out instant, secure transactions anywhere in the world with your customers and enjoy a host of guarantees.
Put time back on your side
- Prioritization: is it important or is it urgent?
Good time management requires good self-management. Prioritize your tasks and create a “to-do-list” to maximize your time. Controlling your time to give matters their due consideration will help you to accomplish everything calmly.
- Be results-oriented. Don’t waste time on unnecessary things.
Set clear objectives and focus on them. Clear objectives allow you and your team to be more motivated by establishing a goal to work towards.
- Set a timeline before you start
Set a clear schedule, step-by-step, on how to achieve your goal. Stick to your timeline and fully utilize your time to avoid mismanagement and delays.
- Plan time for the unplanned
Life is change. So don’t set your schedule in stone. Build in buffer time – more than you think you’ll need – to deal with the unexpected.
- Concentrate on the big issues
To focus on the big issues facing your business, free yourself from distractions. Whether it’s putting your mobile on silent or limiting your entertainment time. Self-control is one of the most important factors in management.
- Don’t snooze. Use the morning.
Instead of sleeping in, why not make use of the morning to handle issues that require the highest concentration? A good start to the day can motivate you all day long and boost your efficiency.
- Seize the moment.
It’s wise to think twice before acting. Or is it? Over analyzing sometimes leads to missed opportunities. Instead of looking at it from every angle it's often better to act while you can and take a chance. You can always improve any wrinkles during execution stage. Your instincts will improve and so will your market share.
- Avoid TMI fatigue.
With so much data readily available today it’s easy to get swamped and confused by Too Much Information. To stay on top in this fast moving world, simply take your time to decide what info is useful and cut out everything else.
- Rest and recharge
“The hardest working man in town” is not effective management. It’s important to give yourself the occasional rest to relax and recharge. And it gives your subordinates a chance to grow by taking responsibility for various tasks while you’re away.
- Don’t let perfection spoil a good thing
We should always try our best. But aiming for perfection does not mean insisting persist on perfection. Don’t waste time on the details if the delay endangers the bigger project.
Small ways to save big money
- Barter to cut down cash expenses
Bartering saves on cash expenditures while also shifting stock. You can join a commercial barter club by giving them a small commission.
- Keep money in the bank
The longer your money’s in your account, the more interest you gain. So try to negotiate longer payment terms with your suppliers. If not, request an early-bird payment discount. Ideally, wait till the very last moment to pay in order to earn the maximum interest.
- Proactively obtain different kind of discounts
Trade or business associations charge a modest membership fee for providing information and discounts on insurance, travel, car rental, long-distance calls or even green fees. Join one or more of these associations to obtain different discounts to suit your needs. Many business card-issuing banks also provide several categories of discounts to SME’s. Use discounts or rebates offered by your card-issuing bank to save money for your company.
- Pay your regular bills with a business credit card
Arrange automated payment of utilities and other regular bills on your business credit card to save time and money so that you can focus on more important matters like running or expanding your business.
- Always, always ask for competitive quotes
Shop around, even for everyday business purchases. Ask for at least 3 competitive quotes to see who provides the best offer. Many suppliers will lower their cost to establish a long-term business relationship.
- Choose loan services with lower interest and service charges
Use a business credit card with deferred payment terms and join the instalment payment plans offered by your card-issuing bank so that you can save interest and enjoy more cash flow flexibility.
- Use your business credit card emergency protection to eliminate money loss
Lost or stolen card reporting, emergency card replacement and cash advance services are available 24 hours a day, 365 days a year, anywhere in the world. The services provided by a business card give you peace of mind when travelling on business.
- Learn to solve problems yourself
Rather than hiring a long-term consultant, hire one for a few hours to learn the relevant problem solving skills. You’ll realize it’s actually very easy to do it yourself.
- Make purchases the smarter way
Saving is often not about what you buy, but how you buy it.
- Start accepting credit cards
With today’s instantaneous, electronic and paperless credit card transactions, you can reduce cash handling and the risk of fake bank notes, as well as shorten cheque clearing time. It’s convenient, safe and quick.
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