In our last post we spoke about Sarah, who was profitable but found herself being squeezed more and more by cash flow issues.
She had to turn the game around and did so with 4 simple strategies.
Increase Revenue
First, she decided to increase her prices. With inflation in the news and the premium value of what she provides, she was able to increase her prices slightly without any major repercussions.
She also introduced a ‘flavor of the month’ subscription to get customers interested in trying unique and premium pastries, which increased their revenue.
And she introduced a loyalty program that encouraged customers to make more frequent purchases.
So Sarah hit both the pricing and volume side of the revenue equation without spending a dime on additional advertising.
Reduce and Push out Expenses
She then renegotiated her contracts with suppliers to extend payment terms where she could (or get discounts) and obtain better prices for her bulk purchases.
By slowing down her outgoing payments and reducing them, she made the business much more cash flow positive.
Speed up Customer Invoices
This was Sarah’s biggest weakness. She allowed her catering customers too much leeway in paying her on time, so she made some changes. First, she demanded a higher deposit and put in a 5% price cut if paid upfront.
This strategy encouraged faster payments and improved the company’s cash flow.
Leasing Instead of Buying
Finally, Sarah looked into leasing her equipment instead of always buying it. She needed some new equipment to expand her catering business but instead of a 2nd hand purchase, she found a way to lease what she needed.
It freed up her cash that would have otherwise been tied up in the asset and allowed her to upgrade faster.
The strategies worked
Sarah not only kept the business afloat, but soon saw her cash balances and business grow month by month.
Now she could prepare her business for the journey ahead. Using a well-managed cash flow system to drive up her company’s value and make it more appealing to potential buyers.
Thinking About Selling Your Business
We know you’ve worked hard on your business. What if we told you there’s a way to make it even better, and position it to sell one day at the top price? With Socratic Scaling, we can show you how.
In as little as six months, we can help your business stand out, scale up, and become something others would have to pay top money to buy.
The best part is these benefits start today. Even if you don’t want to sell, your business will put more money in your pocket, free your time, and be more enjoyable to run.
But you need to start getting ready now. Don’t be like the 7 out of 10 business owners who put it off until tomorrow and then find out they’re stuck with profitable businesses that no investor wants to buy, or child wants to inherit.
Click here to transform your business to give you the life you want – starting today.