Managing cash flow can be a difficult task for a business of any size without enough working capital. But for small businesses, the issue is all the more pressing because many rely heavily on seasonal trends and contracted work that may contribute to a steady influx of cash throughout the whole year.
During winter, many companies lay off workers and outdoor laborers because there simply isn’t enough work coming through to keep operations at the same level of productivity compared to other seasons. Though these slowdowns in work can have a significant impact on budgets and overall growth potential, temporary loss of business does not mean that your company should suffer for several months until work turns around again.
As such, it’s important that revenue streams are still open and that your business is still operating with the goal of long term success in mind. This typically means having continual sources of cash flow, despite a slowdown. Here are five ways for you to keep money coming in:
Prepare in advance
Perhaps the most formidable option you have at your disposal is to always think of problems before they arise. Construction on new projects naturally slows down during winter due to extreme weather conditions and the inability to complete jobs as fast as necessary. That’s why many businesses prefer to hold off on work until spring arrives. However, with this knowledge in mind, it’s best to have the tools in place to manage a reduction in cash flow prior to winter.
For example, you can boost production in the months leading up to winter – or take on more work in the second or third quarters of the year to make sure you have the requisite funds to come out on the other side of winter. Notify your workers ahead of time that layoffs may be necessary, but keep your business on the right track by continuing to look for more contracts.
Look for alternative work
One of the best ways to increase cash flow is to tailor your company’s services to the demands of clients. For instance, if your landscaping business sees less work during winter, then you could diversify your offerings by also doing snow removal work. Or, identify potential problems that arise for many customers during winter, such as frozen pipes, poor insulation and home leaks. Then, expand your business plan to include more maintenance related issues.
Properly manage inventory
It’s not always easy to deal with a huge backlog of work. On the other hand, having not enough work and too large of an inventory can be equally as concerning. Because you probably already have the next year’s business plan in place prior to the end of the current year, you’ll want to get rid of existing inventory as quickly as possible.
The same applies for goods or products that are out of season. To increase cash flow during trying times, you can slash prices on your merchandise or offer limited discounts on certain services. While you may be receiving less revenue in return, any influx of cash is better than nothing.
Evaluate lending options
Though your business may be able to survive in the short term, it’s still best to take a long term approach. In preparation for spring and the likely uptick in orders, you could invest in your business now so that you’re ready to go once the slowdown ends. This is where alternative lending solutions could play a pivotal role in the success of your company.
A merchant cash advance can help provide cash flow on terms that suit your needs. If you’re looking for quick cash, then outside vendors could be the way to go.
Lease instead of buying
If you have select projects and business that are continuing throughout winter, then you’ll need the right equipment for the job. However, if machinery breaks or you don’t have the necessary tools on hand, then you could be forced to either stall progress or buy a whole new piece of equipment.
To combat both of these aspects, you could actually opt for equipment leasing. This not only helps keep your business running – and providing revenue – but also reduces the immediate cost of purchasing equipment. With the money saved by leasing instead of buying outright, you’ll have more room to maneuver in terms of cash flow and expenditures. This approach could provide the cash flow you need during winter.
Making the most of the options available to you is crucial to overcoming a winter slowdown. Rather than scale back your services and risk losing market share to competitors, you should find ways to promote growth in spite of limited funds. National Funding provides small business solutions that accomplish this goal.