4 Tricks to keeping your online business solvent year-round
Most businesses experience some fluctuation in sales from season to season, and online businesses are no different. However, whether you sell bikinis or snow shoes, it is important that your business is running smoothly no matter the temperature outside. Remaining financially viable when sales are low takes a significant amount of preparation and action, and the more ways you have to keep your business alive, the better. To that end, here are four vital tricks to remaining solvent all year.
Understand Your Seasonal Cash Flow
Tax accountants know most of their business to occur between January and April, and costume shops expect a rush of customers just before October 31 – but even businesses without such obviously periodic purposes can experience seasonal ebbs and flows in income. B2Cs with affordable products likely have rapid sales cycles that don’t require much monitoring. However, B2Bs whose cycles might last months or years could easily run down their capital without realizing it, critically endangering the company.
It isn’t difficult to determine whether your business has a seasonal pattern – just review your monthly or quarterly income from the past few years and compare your seasonal earnings. However, remaining solvent despite widely diverging seasonal business requires a strong spending and saving strategy.
Don’t Divert Resources Unnecessarily
Every business wants to save as much and spend as little as possible, but often that desire causes business leaders to make significant mistakes. A common issue, especially with small startups and online businesses, is the drive to do everything in-house. When a business already has a few coders on staff, it is tempting to commit them to building internal apps, like collaboration and marketing tools, instead of paying for existing solutions.
However, every minute your team devotes to non-revenue-building projects, you lose a significant amount of cash. Not only are you missing the income your team could produce, but you are paying them for services you could obtain at a much cheaper rate. Your workers are your resources, and you must use them wisely.
Know How to Get Cash Fast
Cash is the primary nutrient businesses need to grow big and strong, but sometimes businesses are so efficient at using cash that there is none left around to devote to new projects. Even the most balanced businesses unexpectedly need infusions of cash, and it pays to know how your business can acquire cash fast. Here are a few of the most common and reliable methods of procuring cash:
- Factoring. B2Bs and other businesses that rely on invoices might consider selling those to a reliable factoring company. Not only do factoring companies provide cash faster than the average client, they also assume the responsibility of chasing delinquent clients, which frees up your time.
- Crowdfunding. One of the trendiest cash-raising options, crowdfunding asks strangers to invest small amounts into your business for the promise of rewards. You can opt for a shorter crowdfunding campaign – but you might not earn as much as you need with a quick deadline.
- Business cash advances. Some online merchant services providers are more than willing to offer cash advances on credit and debit transactions. However, you shouldn’t rely too frequently on these since the interest rates can be quite high.
- Selling assets. You could consider selling expensive equipment or diving into your personal assets – your cars, your collectibles – to fund your business. This method is used more if your business is struggling, so consider it a last effort if nothing else works.
Ask for Discounts, Give Discounts
Most people want to do good, and that is true of people running businesses, as well. Businesses that supply business solutions are often more than willing to provide discounts to clients who ask for them; some even provide a month or two of free service to good customers who are struggling to make ends meet. If you decide to ask for a discount on services, you should email a business leader rather than your regular salesperson. You won’t always receive the discount you want, but you’ll likely be surprised by how much cash you can save.
Likewise, you should consider offering discounts to your clients. Getting the same products and services for less brings smiles to most faces, and happy customers are often the best marketing tools of all. Coupon codes, sales, and other discounts will drive consumers to your online store, giving you the cash you need even when seasonal income is down.