Managing cash flow is one of the biggest challenges that a landscaping business faces. Many landscaping businesses are seasonal, which makes it even harder to handle cash flow. The biggest trick to overcoming this challenge is to come up with a strong plan. As a business owner you are entrenched in the day to day operations, with little time to think about cash flow. The biggest mistake business owners make is they fail to come up with a strategy. Don’t be ashamed if you are struggling with cash flow, reach out to an accountant so they can help you. It is important to understand that profit and cash flow are two very different things. You can have a highly profitable business on paper, but you may not have a dollar in the bank. This is not something to ignore, spend the time to focus on it and you will reap the benefits. Lets take a look into 7 tips for managing cash flow:
- To take charge of your cash flow problem start with saving money. Landscaping businesses that save are stronger and more mature than those who don’t. Saving will give you an emergency cushion, and will allow you to be comfortable in low times. There are numerous ways to save more. Utilizing used equipment can give you the ability to operate at reduced costs. You can also open a business savings account and fund it with extra cash from the busier seasons.
- Get a handle on your expenses. These expenses need to be tracked and organized. You cannot let these expenses get out of control. Compare your expenses each month to last month and a year ago. Consider the rationale behind every single expense.
- Reduce the time it takes to get paid, and get paid in advance. Stay away from clients who pay late, and focus on those clients that pay on time. There are major consequences if a client pays late and it creates difficulties with being able to pay employees and vendors. Have the customers prepay for services. Keep billing early and often.
- Design a budget that reflects your business’s seasonality. First step is to determine the minimal requirements it takes for your business to exist, which consists of determining the monthly fixed and variable costs. It is important to stick to your budget during busy season so you have the funds for the low months of the year.
- If you cant or wont manage your cash flow, hire someone. You are busy running your business, focus on what you are great in and have an accountant help you with cash flow planning.
- Lease instead of purchase. There are benefits from both owning and leasing equipment. In a cash flow perspective it may be worth to lease equipment due to the low initial cost. Consult with your accountant on advice with this matter.
- Consider giving discounts to customers who request off-season services. This will help beat seasonal rushes, save them money, and provide a steadier balance of cash flow for your business.
Don’t ignore cash flow in your business, it is vital to the success of your business. Do not procrastinate; get it done today.