Business Coaching Houston: “6 Steps Guarantee Positive Cash Flow In 12 Weeks”
Posted on June 06, 2017 by Suresh Iyengar, One of Thousands of Business Coaches on Noomii.
Discover 6 easy steps to guarantee positive cash flow. Understand breakeven, fixed costs, labor costs, marketing costs, pricing and sales conversions.
As a Profitability Coach, I stress cash flow is “oxygen” for business. I wondered why all Houston business owners don’t focus on keeping positive cash flow.
It’s possible they focus on sales so much that they don’t know when they will run out of money. Or a different reason. I don’t know.
But we need both. I mean sales and cash.
Sales and cash keep business moving forward. Remember you always need cash. But you may not need as much sales as you did before, if you manage cash well. And keep cash flow positive.
Why business owners ignore cash may stoke you…
- Knowing Breakeven
Working capital is cash you need to keep the business running. It includes cash in your bank. It’s for your business plan. It could include credit cards or business loans.
Gross profit is sales minus variable costs.
Breakeven is the stretch you can go without fully using up your working capital. It’s the ratio of your fixed cost to gross profit percentage.
Many business owners don’t check their breakeven plan, which could help them keep their cash flow positive. This is also the first chapter in profitability coaching for someone short of cash flow.
- Controlling fixed costs
Fixed costs are costs you can’t fully remove. That’s why they’re called fixed. You need them to run your business. They include phone, Internet, electric bills, rent and other services. Business owners sometimes don’t watch their full list of fixed costs.
Cut fixed cost 10% or more and you’ll breakeven sooner. And you’ll need to sell less to get there. I follow this all-important step in profitability coaching.
- Lowering variable costs
Employee labor is the key to your variable cost. Efficient employees will help decrease variable costs. These costs decrease in ratio to sales. So efficient work will help your cash position. Set up lean methods to fulfill work.
- Understanding breakeven for marketing costs
Quick “go-no go” decisions help in curbing runaway marketing costs. If one marketing track doesn’t yield sales to recover expenses, stop investing in it. Stop before you spend. Stop before it’s late. Check methods to forecast and see which leads converted to sales. Then repeat methods, which yield results.
- Raising prices
95% of the time, increasing prices slightly won’t affect customers. They expect it. It’s treated as normal cost of living. Increasing prices just 10% can withstand fall in sales by 20%. That’s before it affects profits. It’s a powerful way for more cash flow.
- Convert leads into sales
Measure the leads from each channel. Measure how many convert to sales. Then increase work, which brings more sales. This will raise profits, which in turn will lower the burden on cash flow.
Take these steps and your business will yield positive cash flow in 12 weeks.
Written by Suresh Iyengar, P.E., President, Business Unit Execution LLC––“Explosive Business Coaching Houston Results For Small Business”. Want even faster results? Are you ready to discover how? Call 281.410.5375 and speak to your Profitability Coach Houston
