Dealing with limited capital isn’t easy, but it’s a reality for many new and small businesses. When faced with this problem, you must cut costs, increase revenue, or both. However, it isn’t enough just to cut back on expenses in certain categories. You need to take a strategic approach to ensure that your reduced expenditures solve the problem of limited capital in a tangible and measurable way.
The benefit of taking this approach is that it puts your company in a better position for financial growth. Below are several proven ways to deal with limited capital while still maintaining a profitable business.
Consider Allowing More Flexible Schedules for Your Employees
It costs more money to keep an office open five days a week than it does four days a week. This is an easy conclusion to reach when you consider paying for things such as lighting, heating or cooling, and keeping the restrooms stocked.
One possible solution is to close the office on Fridays or Mondays and have employees work from home. Another is to have them work 10 hours a day four days a week instead of eight hours a day five days a week. Whatever alternatives you come up with, you should find many employees onboard with the idea. After all, flexible scheduling saves them time and money as well.
Eliminate Travel Expenses Wherever Possible
Virtual meetings have eliminated the need for travel for millions of business people. Instead of flying to another location to discuss deals, it’s now possible for people on different sides of the world to meet via an application like GoToMeeting or Skype. These meetings are often more effective as well since the participants can accomplish a lot in the short time allotted to the meeting.
Of course, some types of business transactions must take place face-to-face. When that situation arises for your company, look for cost-saving measures such as:
- Flying coach instead of first-class
- Booking far in advance to obtain discounts
- Using points from airline and hotel rewards programs
- Flying into a smaller hub rather than the main one for the destination city
Automate Repetitive Processes
Does your manufacturing company run two machines on every shift that essentially perform the same tasks? Are two people in your office doing the same task two different ways and creating rework for each other? These are just two common examples of how applying the principals of process improvement could free up some finances to spend on additional growth projects. The best part is that you don’t have to spend additional money to realize a reward.
Upgrading your business equipment requires you to spend money, which might not seem like a reasonable thing to do when you’re facing limited capital. However, working with slow and outdated equipment can cost more over time in reduced productivity and repair costs. It’s worth doing a careful cost-benefit analysis to see if this is feasible for your organization.
These are just four simple solutions to improve cash flow at your business. You might be surprised at how many more come to you when you commit to lean thinking.
Lowcountry Business Advisors in Greater Charleston, SC strives to use our experience and passion to help business owners achieve their goals. Let’s meet for coffee and see how we can work together.