Question: What is one thing I should do right away if my business is suddenly strapped for cash?
Ask Your Customers to Pay Up Front
"If your business is in high demand, you may want to consider making some changes in how you require payment. When my company was strapped for cash we decided to see what happened if we asked our customers to pay in full up front. Turns out people did not have a problem with paying in full before we performed our party rental services. We now have a steady flow of cash to invest in new products."
Look for Unnecessary Recurring Expenditures
"Recurring expenditures can add up quickly. Go through your bank account and take a look at what's draining it. You'll find that there are a lot of recurring subscriptions that you might not need anymore. Maybe it's Basecamp for project management or an analytics platform you don't use. Delete it if it's not imperative for your business. "
Reassess Your Business Plan
"If you're out of capital you shouldn't just chase more -- you should determine what decisions got you to that point and reassess your financial projections and models. Are they really attainable? You owe it to your stakeholders to revise your business plan and to have a realistic understanding of how much funding you'll require to grow and scale your company."
Review Your Billing Statements
"If you are suddenly short on cash, I would recommend seeing exactly where your money is going. By looking at your transactions you may notice there is something you are no longer using like a subscription service. By cutting even small costs you can save yourself some cash."
Question All Spending
"If you actively monitor your cash burn and make sure accounts receivable and payable are in balance, you’ll hopefully stay out of cash-flow trouble. But if you’re strapped for cash, take a look at all your costs and ask yourself what you can do without and what you can push out. And make sure you have an approval process in place for spending to more closely manage your cash. "
Look for Discounts
"Cut out anything you don't absolutely need, then look for discounts on the things that you absolutely do. If you need to keep using Constant Contact to email customers, see if you can find a discount on that cost. Most companies offer discounts to businesses and are willing to work with you on pricing if it means you'll remain a customer. Remember that it never hurts to ask."
Find Out Why
"If you find your business suddenly strapped for cash the first thing you should do is find out where the unexpected expenditures are coming from. Much like an ER doctor stopping the bleeding before diagnosing the next step, a business should stop the unexpected cash flow then identify why budgets and forecasts are off the mark."
Lower Your Salary
"The easiest place to cut expenses starts with you. When you start a business, you should already be taking the "MVS" (minimum viable salary). For some people, that is going to be $0. Others may have costs that they cannot defer. If you have personal savings, you can defer your salary until the cash flow situation improves. "