Financial Planning, Retirement Plan, 401k, Investment Blog

Financial Planning, Retirement Plan, 401k, Investment Blog

Starting a small business? Here’s how to keep a steady cash flow.

Posted January 21, 2009 by Bernz

Small businesses are popping up 10 times the average rate due to all the recent layoffs. It’s always fun to learn how people got their business ideas. Many of the ideas aren’t original but seem better because they offer a new spin or cater to an under served market.

Statistics from the Small Business Association reveal that companies with fewer than 500 employees represent 99.9 percent of the 25.8 million businesses in the U.S. Two-thirds of these businesses fail within two years while only 44 percent survive four years. Much of this failure rate is due to businesses closing because they don’t have the necessary cash to keep their companies running. Here are some steps you can you take to maintain a steady cash flow.

Network Strategically. Find ways to pair your services and products with larger companies whose customers share the same characteristics as your target market. For example if you’re a house painter, your business may slack off during winter months. However apartment property managers routinely have maintenance projects, especially when tenants move in or out. A partnership with a larger company can be a bread and butter account.

Share your expertise with others. Build a workshop around your specialty. Charge for your service and offer a discount to those who pre-register. Find low cost meeting spaces at parks and recreation centers, YMCAs, independent cafes, small hotels, and privately owned restaurants.

Be Persistent. Promote your business daily. For example you can start a flyer program where one day each week you distribute flyers to each homes within a certain zip code. Affix the flyer to mailboxes and doorknobs. Give it an attention grabbing heading, like “Guess who’s coming to dinner”.

Get payments up front. If your business is service oriented, ask customers to pay half of your fees before you begin a project and let them know the remainder is due once the project is complete. In other words, focus on collection instead of invoicing.

Give yourself a raise. Or raise your prices. This works best if you haven’t increased your prices or fees within the last year. If customers start to complain (that is the ones who are most loyal, offer them a discount on their next purchase).

Start a virus. Viral marketing is a tactic that gets others to forward information to family, friends, co-workers or anyone they already know. It’s similar to recycling in that as long as the product is useful it gets passed along repeatedly. For example, if you’re a massage therapist, you might send an email message to your friends and relatives with the subject header “10 things you should know before you get undressed”. Then give tips that tell customers how to relax and ways to go about choosing a massage therapist. Next, close your email with a noticeable P.S. that says “Please pass this on to help your friends save money and have a pleasant massage experience”.

Connect with schools. If your product or services can tie-in with schools you broaden your business exposure to educators, students, parents, and an entire community. For instance if you’re the owner of a catering business, provide pastries. Bring plenty of business cards so people will know where to find you in the future.

Have you been thinking of starting a new business as a way to deal with the recession? If so what kind of business are you thinking about?

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