Small Business Tips: Cash Flow Management

by Dawn Fotopulos on September 26, 2011

Cash flow is the life blood of your business. The key in managing a small business is to optimize the amount of cash flow from existing operations.

In this series of articles, we’ll give you powerful small business tips on cash flow management that have the potential to relieve a lot of financial stress in your small business. 

Most small business owners subcontract a lot of their work instead of hiring part or full time staff because they don’t have the volume to warrant it. However, the work still needs to get done.

In a recession, every penny matters. So does risk of performance. If you’re hiring an SEO expert, for example, don’t just take it on faith and pay them on a hourly basis whether or not your site statistics improve.

Cash Flow Management Tip #1: Negotiate payment to subcontractors based on performance, not just on a fee-for-service basis.

Some key metrics on whether the SEO has performed could include:

  • What benchmarks have you and the SEO expert agreed to as reasonable for the period of time they’re engaged?
  • Has the site traffic grown as a result of the SEO experts additional effort?
  • Have newsletter sign-ups improved?

What you really need is not an SEO expert: you need a collaborator who is just as invested in your success as you are. SEO is all about driving relevant, loyal, traffic to your site.That’s what drives value for you, the site owner.

Structure the payout so the SEO expert gets paid MORE if site statistics improve dramatically than if you just paid him or her on a fixed cost basis.

This is an important way you can spread your risk of performance AND conserve cash at the same time. If your small business website succeeds, you’re happy to compensate the people who helped you get there.

And if it doesn’t, you’re not left holding the bill with nothing to show for it.

Be sure to watch our Instant CFO Course on Cash Flow Management which provides many other ways you can conserve cash and make more money.

Remember, a website’s value is in two things; your newsletter list and monthly revenues generated. Anyone who can help you drive both those metrics is adding real value to your online assets.

If you want to know how to value assets, be sure to watch our Instant CFO Course videos on the Balance Sheet.

Cash Flow Management Tip # 2: Collections Strategy

Cash Flow Management Tip #3: Collections Policies

Cash Flow Management Tip #4: Ensure Clients Pay You - Meet Susie

Cash Flow Management Tip #5: Keep Your Small Business Profits Soaring!

Cash Flow Management Tip #6: Reduce Credit Card Purchases Expenses and Improve Cash Flow

Cash Flow Management Tip #7: The Easiest Way to Collect Payment

In your corner,

Dawn Fotopulos

The ultimate small business crash course

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{ 1 comment… read it below or add one }

Zachary C October 1, 2011 at 10:17 pm

Tie payment to measurable results, and mitigate risk. Brilliant reminder. Thank you.

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