- It’s not what you make; it’s what you keep: As obvious as this sounds, it is easy to get caught up in the opposite of what will increase your cash flow – increasing your revenue with a commensurate increase in costs. Instead, focus on continually increasing the difference between the two.
- Increase your revenue: Continually think about ways to increase your revenue. Aside from the obvious ways to increase sales, are there some creative ways to increase your top line? Can you increase your value to your customers? Can you be more selective of the types of customers you sell to? Have a brainstorming session with your management team – a few “gems” might appear.
- Decrease your costs: Is there a way to maintain your revenue and yet decrease your costs? It is critical to find creative ways to decrease costs while not impacting service, quality etc. Look at things in a new way – ask someone outside your normal “circle of people” to throw out radical ideas to get the discussion started.
- Decrease other items such as inventory, financing charges, and asset purchases etc: If your business is one that carries inventory, every dollar of inventory directly affects your cash flow. Of course, you’ll need some level of inventory; however, minimize it. For every dollar not invested in inventory, you could use that dollar to generate additional business or for some other productive pursuit. The same philosophy is true for evaluating asset purchases, etc. The key is to evaluate each with the total picture in mind – not just from one angle.
Ideas to increase cash flow
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