Profit and cash flow are not the same. Profit is just a theory. A business can go broke while making a healthy profit by not setting aside enough financial reserves to meet its commitments. Here are five ways from ActionCOACH’s founder Brad Sugars’ book Instant Cash Flow to supercharge your cash flow to turn theory into reality:
- Sell More Big Margin Goods/Services …
Why not move to products that offer more margins? This may mean buying a slightly more expensive product that you can make a higher profit on. Or it may mean buying smarter, as sometimes a lower priced item will offer a greater margin. You should know exactly how much each item makes you, and then emphasize those which make you the most money. If you work in the service industry, you should consider which services offer the most money for the least amount of effort
- NO Discounting
If you constantly discount, why have a regular price? This applies to businesses who are always discounting instead of coming up with effective marketing, or an actual reason to buy. Discounting not only costs you money, but it gives the impression that your normal prices are a rip-off. Customers may also hold off buying, thinking that the item that’s $100 today may only be $80 tomorrow. It’s better to not discount and simply offer more add-on value.
- Stop Running Ads that Don’t Work …
If your ads aren’t making you money, then stop running them! It is important to test and measure each ad to make sure that you’re getting the maximum return possible. When you find one that works, keep using it. This only comes after a period of testing and measuring – it may be six months before you find the right ad. You need to view this outlay as an investment in your business – it’s an investment in finding out what works and creating that ‘magic ad’
- Re-finance …
If you have a number of loans, then you may need to consolidate them into one. This gives you the advantage of paying only one interest rate and one repayment. Shop around to find the best terms. This doesn’t always mean the lowest nominal rate, so make sure the one you choose suits your particular needs. With banks becoming more and more competitive, there’s a bank out there willing to give you a loan for less. If your bank isn’t willing to match their rate, then try another.
- Where’s the “Silver Bullet” in your business?
Every business has something that they are doing (or not doing) that – when attacked – will generate instant cash flow. Talk to your mentor or business coach. Let them help you find the hidden dollars in your business that will allow you to move to the next level.