It’s up and running, but projects are taking longer than expected. You are running into problems that are undermining your finances. Customers aren’t paying as fast as you thought they would. Expenses do not stop and wait for you to have money. Opportunities to purchase materials at an attractive price do not wait until you have money. These and other issues affect your ability to stay in growth mode. Here are three tips on where you can start to have a positive effect on your cash flow.
1. Dairy cow. As for your operation, is there something that is an entry-level product or something that you created internally to streamline your own processes. Consider putting some emphasis on quick products that can create a steady stream of income. A high-tech company had a test unit that field engineers took to remote areas to test the strength of the product. The marketability of that simple unit had not been thought of and had the potential to generate sales in remote areas around the world. It was the cheapest item the company made and had never been considered a commodity. Another company had a small program that helped its own test engineers with their work. It was another unidentified product that could generate stable income. The owner of a small contracting business created a program to simplify his job. With very little effort, it could be used to run any small business. The last time I saw him, he said that he had sold several shows and made millions on them. It may not even be the business you’re in, but there could be a constant revenue generator hidden in your operation.
2. Changes. It is not about bringing more money. It’s about plugging leaks. My father was a general contractor when I was a baby. The first and only project he had was a beautiful house in Marin County in Northern California. Dad had a partner – George. George was a customer please. While Dad was shopping for supplies, George would be trashing the bathroom because the owner realized they didn’t like the color of the floor-to-ceiling tiles as much as they thought. Of course, that meant the matching floor tiles had to go, too. George always promised that he would not charge for changes. The project made the cover of Better Homes & Gardens, but it bankrupted Dad and George. If you were building a bridge between two cities, you would have agreed on the specifications, completion date, and costs. If, when you were 90% done, the mayors came up to you and said they made a mistake and they should have had one more lane in each direction, you could probably say, “No problem. We plan future expansion on the design.” . When the mayors wanted to make sure he would still complete the job in the same timeframe and for the same costs, he would talk about increased time and money. You may not be building anything as big as a bridge, but don’t let change requests eat up your money.
3. Connections. Keeping your nose to the whetstone does a couple of things. It wears you down and prevents you from discovering information outside your company that could have a significant effect on your operation. A small business struggling with cash flow issues had no one available to network with. They brought in an operations management consultant whose marketing efforts were focused on networking. As issues arose in the conversation, the consultant had connections that had answers. Some zoning issues that created a safety issue for employees had a surprising solution when the consultant mentioned the problem to a networking contact who was a commercial construction contractor. The consultant knew of a lawyer who specialized in another area where the company needed help. An informal conversation between the consultant and a networking contact revealed a previously unidentified market for the client’s product. All three occurred over a two-day period as a result of the consultant’s ongoing networking efforts. It’s worth spending time staying connected with people outside of your company.
Bottom Line: These types of solutions can be an ongoing benefit to your business with clear and concise communication of issues restricting your cash flow. Keep an eye out for the types of opportunities you’ve seen here.
