Cash is critically important for business, with many operators finding that periods after holidays or short trading months can be extra tough on the cash front.
Staff leave payments, a short close down, penalty rates for public holidays, slow debtor collections or even extra stock holdings, will all have drained cash from your business.
So, if you have returned to work after a short break with a bit of a “cash hangover”, here is some practical actions which can stimulate some extra cashflow.
Product/Service Special
This can be one of your normal services, or perhaps a package of a few of them. It could be for a product or service – all of them work. As you are looking for some quick income, offer a price discount to do the work now – but note that payment terms are either shorter than usual or COD. If you are offering terms, seek a heathy deposit to get started.
Targeted Special
For your existing clients who you know well, contact them with a customized special – making it relevant to their specific needs. With these clients you know what they need and what their patterns are – so this information can be very useful in creating an enticing offer. Once again, a special offer comes with faster payment terms.
Cross Sell
Cross sell extra or complimentary items with every sale. Naturally smaller price point items are the easiest to “bolt on”, but it’s all relative. If you have a sale for $1,000, a “bolt on” for $100-200 is only a 10/20% increase. If the client sees the value, then it’s not hard. Two secrets to successful cross selling are; 1. proactively present or offer it to the client, and 2. give thought to complimentary products or package groups and how they add value. It amazes me how few businesses proactively do this.
Debtor Collections
Debtor collections tend to be pretty slow in January – as no one has the spare cash, but this is no reason not to follow up. You have supplied the product or service, so follow up your Debtors with a disciplined collection process to receive payment.
Special Opening Hours/Client Only offers
The element of “exclusivity” is always attractive, as everyone likes to feel special. Promote some good “anchor offers” to get people in the door and go from there. This works really well for those in retail with a good product range or large client database.
Old Stock
If you have old stock just sitting around – you are burning cash – as the stock is devaluating every day. Equally, you are locking up your valuable and finite cash resources in that stock. Discounted old stock can also be used in packages, so if you buy “X” item, you can then pick up “Y” item for 50% off. If stock is not moving – then discount it and move it along. I have heard many comments over time that the old stock is worth holding “just in case”, but in all reality, it’s normally better to discount it and take a lower margin – releasing the cash to buy better quality or more current stock items.
Equipment Dead Time
For those who have equipment (either leased or owned), it’s costing you whether it’s operating or not. So offer a special production run or limited time offer to get some production from it. Even if your margin is lower, you are still getting cost recovery for the machine which is better for your cash flow.
Out of Hours
Offer to do work when others won’t. This may be early in the morning, late in the afternoon, on the weekend or even public holidays. Whilst you need to be mindful of labor rates and overtime, for many small businesses – this can provide a great advantage to pick up work. Consider why it would be inconvenient for the client to have the work done in normal hours, and then use this in your sales pitch to show how you are helping them!
Create Urgency
People are more likely to spend money when they see urgency in the situation, so show clients why work needs to be done now. It may be compliance related or that delays could cost them with additional running costs or potential damage, but regardless, put some urgency into the conversations and make sure that they are aware of the cost of “not doing something”.
Do something that your competitors are not
Many of the points above fall into this category, but look at your competition and see what they are doing – and then do something extra/different. It may simply be that extra bright sign out the front of a retail store to catch attention, the proactive calls to your client base about specials, some small samples or give always, or just spending some considered time scripting additional product packages. Be the “purple cow” [Purple Cow – Seth Godin] in your area or industry.
Every business is different, so not every option will work for every business – pick the options that are suited to your business and implement them today. The quicker you implement them; the sooner the cash will start coming through the door.