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Build A Cash Pool For Your Home-Based Business By Following 7 Simple Rules

Written by: Laurie Hayes

Article Overview: Cash flow is the lifeblood to your home business. Without it, there is no business. Period. What could be more important? -- Turning that flow into a growing pool by following seven simple rules.

Build A Cash Pool For Your Home-Based Business By Following 7 Simple Rules

Although your income statement might show a healthy profit, it doesn’t amount to a hill of beans if you have no cash flow.

One of the biggest mistakes made by new home business owners is allowing clients and customers to buy now and pay later. In other words, extending credit.

Credit is for banks and large corporations, not for you as a home-based entrepreneur.

Cash flow is the lifeblood of your business.

Without it, your business will wither and die regardless of how many sales you’ve made or how much money is owed to you.

Cash flow represents the amount of money coming in to your business through services rendered and products sold, and money going out to cover expenses and production costs.

Your primary responsibility as a home-based business owner is to ensure the flow is consistent with more money coming in than going out so a pool starts to form to hold the overflow.

This overflow is what allows you to make early payments so you can benefit from vendor discounts, to take advantage of special deals, capitalize on newfound opportunities, and easily cover unexpected emergencies.

As soon as cash flow fails to produce the surplus funds you need, challenges arise and stress and overwhelm quickly follow.

Integrate these seven simple rules to your operating strategies and enjoy the benefits of a steadily growing cash pool.

1. Request payment prior to delivering your product or service. If your service is delivered over an extended period of time and asking for a one-time payment in advance isn’t realistic, divide the payment into segments and request payment in advance of each new time frame.

For example, if you provide weekly house cleaning, consider requesting payment at the beginning of each month in advance of providing your services – or suggest three or six months payment in advance and offer a discount as an incentive. A mere 10 percent discount over a three-month period could put an extra $100 or more into your client’s pocket. Many will jump at that deal.

2. Pay every bill on time to avoid late payment charges and earlier only if special payment discounts apply.

As a hair stylist working primarily with cancer patients, imagine spending one thousand dollars a month on wigs. If the supplier offers 2/10, net 30 as payment terms, you will save two percent by paying your invoice within ten days. That might only be $20, but over a year, it adds up to $240.

Take advantage of this incentive with every supplier that offers it and you could keep thousands of dollars in your business that you would otherwise have spent.

3. Deposit payments as soon as you receive them. Instead of making one or two trips to the bank each month, make them daily or weekly. Letting checks lie around increases the risk of loss. Also, go to a teller when making your deposit. Using an ATM machine removes any evidence you deposited real cash or checks. An employee or technical error or internal theft could create problems you simply don’t need.

4. Use a business credit card whenever possible for travel, meals, and minor expenses. This leaves more cash in your hands and defers payment. Using a card that awards travel miles also helps you cut future travel costs. I’ve enjoyed cruises and free flights to business conferences thanks to air miles.

5. Create continuity sales. Build a product or service into your business that your client could use on a continual basis. For example, if you run a bookkeeping business and your clients struggle with cash flow, recommend bank reconciliation services every month.

Many clients hand a box of receipts to their bookkeeper at the end of each year and cross their fingers hoping they did well. Helping your clients understand exactly where they are each and every month is an exceptional service that many will jump at. One client at $30 a month would give you $360. Ten clients at the same amount, paid in advance would give you $3,600 cash at the start of the year.

6. Create something that allows you to do the work once, but profit from over and over again. For example, many of today’s business owners are creating e-books (electronic books) and audio recordings sharing valuable tips, information and knowledge that improve the health, happiness and prosperity of others.

Selling electronic products online removes production costs and provides a steady flow of funds into your business.

7. Invest your overflow. Once you have built a comfortable overflow, consider investing some of it to make it grow even faster for you. Letting a large sum of money sit in your bank account does nothing to accelerate growth. Talk to an investment professional and find out how you can make that money work for you.

Start with these seven simple rules and get creative. Brainstorm ideas for special offers, continuity programs, passive revenue streams and investment possibilities.

Get input from professionals, mastermind members and your coach. You can do it. They can help.

2007 © Laurie Hayes - The HBB Source

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Article Tags: business credit card, cash flow, cash flow, home based business, home business owners



Related Forum Posts
Re: Great start, but no finish - My advise is FOCUS on your business. Focusing is the main factor to succeed on business. If you have a great idea, then follow it only, don't look anywhere else. It is especially essential in an online business. Because there are a lot of mind blowing sales letters promising millions dolllars or overnight success, people find it difficult to concentrate on one business and they lose their energy. Concept is simple. 1- Have a good idea; 2- Build your business on it; 3- Monetize your business; 4- Promote it; 5- Build list of responsive customers; 6- Maintain You Business. Focusing and not fearing from competition (instead you can learn from competitiors) are main tips of billionaires ,BTW. Orxan
Re: Improving Cash Flow - Thanks for your information. guide on how to avoid the problems of over trading. <-- Where is this guide? Any URL? guide on debt factoring and invoice discounting: the basics. <-- Where is this guide? Any URL? I just want to learn more about this. I am also looking for a good article on: What exactly is Cash Flow? Ways to improve cash flow at individual level and organizational level? I think it is a problem of thinking and mind sets problem. If we can change the way of spending, we can have more Cash. Robert
Home-based Business - signed my first 200 customers while I worked from home. You can make it work. Many small businesses do, i.e. interior designers, AC/Heating Companies, moving companies, Plumbing companies, painters, landscapers, web designers, Mobile car mechanics, Computer Techs, online retail businesses, Pool cleaners, Home Repair, Telemarketers, electricians, Artists, etc
My entry - 1. The Best Business Books Ever: The 100 Most Influential Business Books You'll Never Have Time to Read - this is a fascinating book about the history of Business theory, and I'd recommend it to anybody. 2. The Big Book of Small Business: You Don't Have to Run Your Business by the Seat of Your Pants, by Tom Gegax. Ditto. 3. PADI: The Business of Diving Book Okay, so this book won't be of use to anyone who doesn't want to start a scuba store, but I did, and this book was of course invaluable to me in reaching that goal.
How do you know if you have a good idea? - [quote="orxan":3118uboz]My advise is FOCUS on your business. Focusing is the main factor to succeed on business. If you have a great idea, then follow it only, don't look anywhere else. It is especially essential in an online business. Because there are a lot of mind blowing sales letters promising millions dolllars or overnight success, people find it difficult to concentrate on one business and they lose their energy. Concept is simple. 1- Have a good idea; 2- Build your business on it; 3- Monetize your business; 4- Promote it; 5- Build list of responsive customers; 6- Maintain You Business. Focusing and not fearing from competition (instead you can learn from competitiors) are main tips of billionaires ,BTW. Orxan[/quote:3118uboz] Thanks orxan! But how do you know if you truly have a good idea or not? If we ask ourselves, we may be suffering from tunnel vision. On the other hand, friends/family may try to discourage us from pursuing a small business because of their own fears, while others will simply give us an empty "you can do it!" line.


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