For small businesses that start as local or home-based operations, the major objective is quickly building cash flow. This is critical to creating a thriving business. Only larger ventures with outside capital are engaged in long-term commercial innovation. Most new businesses are simply a way for the entrepreneur to attain financial independence.
Unfortunately, a startup typically experiences gradual growth toward sustainability. However, you can deploy some simple techniques to immediately lift the cash flow of your new business.
One action for boosting cash flow after startup that is frequently overlooked—despite the obvious benefit—is to drive customers to buy whatever produces your highest profit margin. Every company has a basic product or service that is the best seller. This is the item that is provided for the least cost.
A new business should generate word-of-mouth marketing for a singular item. The popularity for one product or service enhances cash flow for a startup. This maintains low costs and high profits on each item sold. Diversify later. Diversification among many products requires capital to build inventories. Diversity for services requires extra capital for staff and training.
There are some other ways to jumpstart cash flow for a new business. One method is using pre-paid customer deposits. A service business will frequently ask for deposits upfront to bind an agreement. Of course, you have to make sure that you eventually deliver the full services your customer agrees to purchase. A product based business can obtain pre-orders. These are normally a percentage of the sale in order to guarantee a specific delivery date.
Next, start a special program for new or frequent customers. One of the attractions for using social media as an advertising outlet is that these sources permit you to give away something to individuals that discover you. In the process, you acquire a captive audience.
Offer coupons to new customers or provide a limited-time early purchase period on special deals. Give them an incentive to come to your business for the newest, best, or lowest price products before they’re revealed to the public.
For especially loyal customers, you can then offer exclusive membership in a frequent buyer program. You will give some discount on your high profit margin items that is offset by receiving $5 or $10 membership fees upfront. Plus, you obtain a targeted list of highly motivated customers.