In the best of circumstances, running a business is often a complex and—unfortunately— uncertain undertaking. Even the most organized entrepreneurs with the strongest ideas run into unanticipated hurdles, which they either recover from or ultimately succumb to.
It may not be possible to plan for every possible pitfall, but there are a few strategic and fairly simple steps that business owners can take to keep their business more secure. Here are our top three tips for navigating risks and uncertainties for 2023.
Leverage Subscriptions for Steady Revenue
One simple way to guarantee a steady stream of income and experience less business uncertainty is through the use of subscriptions. Customers who have signed a recurring subscription with a business give entrepreneurs the reliability of predictable revenue, which is particularly helpful for fledgling enterprises that need a consistent cash flow to survive.
Consider what might make a subscription appealing to customers. Offering high quality and reliable products and services can be an excellent way to attract customers, persuading them to make a long-term commitment to a company.
With this exchange, business owners can enjoy the relief of a steady, predictable paycheck while building a strong and loyal customer base, and customers will also experience benefits from reliable outputs and deliverables.
Analyze, Consolidate, or Remove Expenses
It’s usually helpful for business owners to periodically evaluate their monthly and annual expenditures, identifying areas where there may be unnecessary spending. For newer businesses in particular, striking the right balance between needs and wants for optimal operations is a learning process.
We recommend beginning with a list of all business vendors, and sorting them into “necessary” and “unnecessary” columns. Depending upon budget and revenue, temporarily eliminating unnecessary services is one effective way to save funds and decrease financial uncertainty.
Similarly, it’s worth taking a look at fixed costs, and seeing where the business could adjust to make expenses align with revenues. Even if it may not be possible to cut certain vendors or products, there may be an alternative solution that is less costly to the company and less costs usually means lower uncertainty.
Focus on Generating Cash Flow
While this point may seem like a no-brainer, having a steady cash flow goes a long way toward boosting stability and reducing business uncertainty. The question is: how can a business owner achieve this ideal cash flow?
For one, if your business is a bricks-and-mortar establishment, leasing instead of buying usually ensures smaller payments which frees up cash for other uses. It’s also important to send out invoices as soon as payment is due, or even requiring payment up front before you complete the service or order. Finally, strategically raising the price of your products or service can help close existing gaps, leading to increased revenue. Of course, business owners should be careful not to dramatically increase their pricing, as this may hinder sales rather than bring in extra cash.
If you’re interested in an in-depth, bird’s-eye-view of your company’s financials to help you feel more secure about your business’s future, reach out today to learn how we can help.
