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UpGhana Forum / Business / Five Ways to Keep Cash Flowing For new business owners (1 Post | 388 Views)
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Five Ways to Keep Cash Flowing For new business owners by Vibe01(: 3:22 pm On Oct 28
Many people start an online business and wait months before they start earning money. This is disheartening because they struggle to convert visitors, they struggle to rank for their keywords, and even more they struggle to pull traffic. Here are some ideas for getting started.
While it’s important to spend time on building your brand and generating sales leads, it’s downright vital to quickly cultivate a steady stream of what accountants call “free cash flow” — that is, the amount of cash coming into your company over and above all of your expenses. After all, if you don’t have money, you won’t be around long enough to worry about those other things.
If possible, keep 10 percent to 20 percent of monthly revenues on hand because at that point, in most companies, you’ll be able to reinvest into the growth of your business — from purchasing additional product or service lines to roping in more suppliers or even building up your team when you need to.
Here are five ways to keep cash flowing consistently into your business:
1. Know your expenses.
Through coupon sites like Groupon and BuyWithMe or even on your own — can help you attract new customers, selling anything at a loss won’t help you generate a positive cash flow.
My view? Never discount. But if you do, know the costs and impact of what you’re offering and be prepared for the fallout. Among other things, you’ll need to know your overall cost basis.
You should also know how much you should ideally charge, the cost of your offer and the profit margins on your product or service. How else will you know if you are operating at a profit or loss? To do the math, see our break even calculator.
2. Bundle products and services.
Even though discounting isn’t always recommended, adding value is. By creating bundles of products or services, for instance, businesses can inject tremendous amounts of perceived — and tangible — value into their offerings for very little cost.
A good example is the maintenance agreements some car manufacturers do provide with the purchase of a new car. Not only does that type of offer help allay a major concern or frustration customers have — paying for a breakdown or time lost at the dealership — it also offers real value in terms of limiting out-of-pocket maintenance costs.
Put more simply, you can increase your price point initially since you’ve helped lower a perceived risk by offering something as basic as a guarantee.
3. Create a back-end product or service.
If you know your initial offer to reel in new customers won’t be profitable, find ways to create higher price points on back-end products or services.
Wait, Click here to learn how to keep cash flowing for new business owner
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