We live in an entrepreneurial age. An age when kick-starting your own business venture requires nothing more than a computer, a continuous Wi-Fi connection, and an investment fund that covers the bare essentials for a start-up. In such an opportune growth environment though, entrepreneurs still face many challenges on the road to long-term success.
Needless to say, one of the biggest obstacles is establishing a positive revenue stream and minimizing financial expenditure across the board, which is probably why most start-ups go under in less than a year. With this common entrepreneurial pitfall in mind, let’s take a look at how you can reduce your operational costs regardless of the stage your company is at, and generate more cash flow for a financially stable future in the competitive marketplace.
Take advantage of the digital workplace
The rise of the digital era opened up numerous lucrative doors for entrepreneurs and employees, as the traditional career concepts gave way for a more flexible form of employment – remote work. Nowadays, although still a valuable asset, managing a physical office space is yet another expensive task on your to-do list, and truth be told, there is no reason why you shouldn’t switch to a virtual setup instead.
Not only is this a great way to slash your overheads right down the middle, but it’s arguably the best way to attract and preserve a diverse employee collective hailing from all around the world. With the use of smart team management software and some diligent scheduling, you can easily eliminate the costs associated with office procurement, upkeep and maintenance.
Of course, this doesn’t mean that the team shouldn’t get together every once in a while, and you can easily use the money you saved up to invite everyone to a co-working session in one of the fully serviced spaces across town. Efficient, effective, and financially-sound.
Outsource and automate everything you can
Another amazing benefit of the digital age is the ability to use technology to outsource all relevant and menial processes to experienced professionals in the region or abroad, as well as automate many of these processes with smart software. Remember, no matter the industry, no matter the niche, there is always something you can automate and thus cross the expense out of your books.
Not a couple of decades ago, outsourcing was considered an ambiguous tactic with uncertain outcomes and a high risk of financial loss simply because the field was so young and unregulated. Nowadays, though, it’s a completely different story, and in fact, the business world thrives under these kinds of strategic partnerships. With outsourcing and automation, you can not only attract top talent in the industry, but you can also optimize payroll expenses and minimize operational costs – leaving more room for brand development, marketing, and company-wide innovation.
Increase cash flow by handling failed payments
When a payment fails, everyone gets frustrated, and small business owners start panicking. After all, every payment that fails to land in your account is putting a dent in your budget and endangering your financial position. This is why it’s imperative to minimize failed payments as much as possible in order to maximize revenue, boost customer retention, and thus preserve your image as a brand.
For instance, by implementing a comprehensive direct debit system that gives your clients and customers the opportunity to resolve payment issues on the spot, you can effectively eliminate financial leaks that occur every time a monetary transaction fails. Using smart software to your advantage, you can choose how to handle your customers’ failed payments and automate this process. In most cases you have the option to notify your customers of any payment issues, automatically rebill them for any failed payments after a set period of time, and offer numerous other payment options to fit their financial capabilities. Arguably, this is one of the best ways to maintain positive brand awareness and nurture long-lasting relationships with your clients as well.
Incentivize customers with deals and discounts
Operating at a loss is every entrepreneur’s worst nightmare; however, if you build your discount policy on a sound financial projection, you can easily leverage the power of the discount to attract new business and keep old customers coming back for more. Remember though, there is a difference between selling at a loss and discounting.
This is a nuanced problem many companies never manage to use to their benefit, so pay attention. The first thing you need to do is make a detailed financial report that will set the grounds for any discount brainstorming you plan to do. Having a clear financial overview will help you determine how to at least break even using discounts, if not establish a positive revenue stream. Be sure to determine your overall cost basis, your ideal price for the product or service, as well as their profit margins in the industry. This way, you will be able to craft a discount strategy that will attract new business without compromising cash flow.
Add value to your product or service
Discounting might be a risky tactic for boosting cash flow, but adding value to your products or services is one of the best ways to increase customer retention, establish long-lasting relationships, and attract new business opportunities. As every experienced business leader will tell you, there is always a way to add value to a product or a service. When crafting your “better value for money” approach, keep in mind that everything you add to the initial offer needs to help resolve a certain issue for your customer in the long run.
This can be as simple as complementing a new pair of shoes with shoe polish (be sure to point out it’s free), or as complex as providing 24/7 customer service, guidance, and technical support on all of your products and services. Regardless of the product in question, you can use this tactic to safely elevate the price beyond the average profit margin and increase cash flow while establishing a long-term relationship with your clientele.
Financial stability is as difficult to come by as ever, even in such a promising business environment entrepreneurs are working in today. Nevertheless, by using modern technology to reduce operational costs and generate better cash flow, you can build a financial foundation that will help you pave the road to a successful and affluent future.