7 Strategies to Increase Cash Flow in Your Small Business

Would your business benefit from a higher rate of cash flow? We’ve all been there. Increasing cash flow suddenly isn’t easy, but there are a few strategies you can employ instantly that might just help. Try one, or several, of the following strategies to increase your cash flow this month.

Reduce your spending

Decreasing your spending is one way to increase your small business cash flow. The first step to implementing this strategy is to carefully analyze all of your business spending. How much do you pay for web hosting, Facebook ads, your email autoresponder, online memberships, and other business tools?

After analyzing your spending, look for areas that can be reduced. It’s important to approach spending cuts carefully because cutting costs can compromise efficiency and quality. If, however, you’ve identified things you’re paying for but hardly using, that’s a great place to start.

Remember there are often free alternatives to many paid tools and services. I’ve compiled all the free tools I love in my Kindle book Free Tools for Writers, Bloggers and Solopreneurs.

Extend discounts for fast payments

If you’re trying to encourage your customers to pay faster to increase your cash flow, then discounts for fast payments may help. The discount doesn’t have to be large, but customers often appreciate a small amount of savings. Try several payment plans with different discount levels to reach more clients.

You can also offer discounts for bulk orders if practical, or offer a bonus with orders over a certain amount. A bonus product often works especially well when selling digital products, and you can make it available for a very limited time to encourage people to buy straight away.

Watch your inventory

Are you investing a large portion of your cash into inventory? Depending on your business model, inventory may be the lifeline of your small business, but you don’t want it to destroy your cash flow.

The items you sell shouldn’t sit in warehouses or storage facilities for long periods of time. Find a balance between having enough inventory to satisfy customer needs and having too much.

Re-think your business model

Many small businesses keep no inventory at all. Business models that enable you to do this include affiliate marketing, selling digital products (like the success kits I sell through Gumroad, or the printables I sell through Etsy), or dropshipping. Find out more about dropshipping in this post.

Raise your prices

Are you keeping up with inflation? You might be able to raise prices on your products and services to keep up with the market.

Higher prices can lead to more cash flow, but they may also scare away customers. Find a balance that works for your business andyour customers.

Offer rewards

You can offer a variety of rewards ranging from discounts to extra products. You can make a special rewards program with gift cards or other items, or a rewards system based on loyalty points. Remember the easiest person to sell to is someone who has bought from you before and was satisfied with the purchase, so any form of loyalty scheme that encourages repeat sales is worth trying.

Customers who prepay for large packages, services, or multiple items could receive extra rewards. These rewards can encourage them to stay and keep buying your products or services.

If you need more cash flow in your small business, try incorporating one or more of these strategies, to discover what works best for you.


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11 thoughts on “7 Strategies to Increase Cash Flow in Your Small Business

  1. Very good advice for those of us on a small budget or who need a cash infusion. For me, the best strategy is to reduce spending and use as many free or low-cost services in my business as possible.

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