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When small, one-person business owners collect together and discuss the main difficulties they face, a lack of cash flow is often the most substantial difficulty faced particularly within the first few months of being in business and often later, from time to time. To stop running your business too close to the edge, learning the secrets that will eradicate your cash flow problems is essential. 

 
Many business people are experts within their own field and this may not include the financial management of their organisation. You can easily seek advice from professionals who understand cash flow problems and can suggest solutions to remove the difficulties. Where necessary, you can hire someone for just a few hours each month to manage areas of your business where you lack knowledge and understanding.

 

Debt is inevitable, or is it?

Some one person businesses try to sell their products or services at a cost that is too low for them to be able to maintain the business, let alone make a profit. This failure may cause your business to go into debt and suffer cash flow problems regularly until you are able to charge the right price for your business to succeed.

Debt is not inevitable once your business is running efficiently, but is often expected during the early stages, at the very least. Before you begin your business, it is best to organise a system where you are able to manage your finances consistently by billing effectively and efficiently and collecting funds on time.

When your business is small or in the early stages, you may need to pay for goods because you have not built up a good line of credit when you purchase items from larger businesses. Some businesses will insist on paying you for your products and services on a longer timescale than you have negotiated with the bills you must pay.

Debt may be unavoidable at some stages and where you plan for it, it will just become part of your long-term forecasting so you can always remain in control.

 

When to change your cost structure

Where your cash flow is consistently against you, you will have to change something to make your business profitable. Change can be good because it stimulates you into thinking how you can improve your business.
 
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You may need to look at:

  • increasing your costs so you can make a profit
  • find out if you can buy your goods for a lower price while maintaining quality
  • inspecting your overheads to show you ways to reduce your outgoings

Analysing all of these methods may be scary, but you want to be in business for the long term and you need a positive cash flow to pay your bills.

 

Ask for help

Do not be afraid to ask for help. Thousands of people have been operating their organisation with cash flow problems in the past and this will continue in the future. Those business owners that are prepared to look for help will keep themselves ahead of the competition – who are foolish not to ask for advice to solve the problems and difficulties of running a small business with cash flow problems.

 
What could you do (or suggest to others) to improve your business cash flow and save your one-person business from extinction? Please leave a comment below.

 

Find more tips in part 1 and part 2 of this blog series:

 
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