So, your business is up and running. You’ve established yourself, collected some customers, and have a product or service offering on the market. Hopefully you’re also tracking your finances, including your income and expenses. Keeping good accounting practices – including inventory sellthrough, details of recurring and one-off expenses, and income – is pivotal to managing your business, and making good business decisions.
We’ve given an overview of cash flow and what it means for your business. We’ve also written about increasing cash flow by managing staff and inventory. Now, we’ll look at a different aspect of your operations to help you continue to improve your cash flow through marketing optimization and tapping into new opportunities.
An important reminder: cash flow is not the same as profit. When referring to cash flow, we mean the amount of cash (and equivalents) that are moving into and out of a business. Having a positive cash flow means you have the ability to reinvest in your business, settle outstanding debts, or have a buffer to give you peace of mind.
Evaluate Your Offering
Hopefully, part of your practice of tracking your finances includes keeping an eye on your sellthrough – which products sell in which amount of time, and which are most popular. This will have a big impact on your ability to make intelligent business decisions that will improve your cash flow.
Start by checking if the “80/20 Rule” applies to you. This “rule” of business says that 80% of your sales will come from 20% of your products. It’s not a hard-and-fast rule, of course, but see if it rings true in your business. This will help you to see where to cut back products that are underperforming, clearing space on your shelf, website, and inventory reports, allowing the strong sellers to really shine.
Once you have a good view of what your customers are regularly buying, you have a good view of who your customer set is. From there, consider whether you could diversify your product offering. Try testing the waters with products that support your strong sellers (even bundling them together, perhaps), or, if you want to reach a new market segment, start small with pulling in some new items and marketing to a new audience.
But, how do you reach more customers than you already are?
eCommerce is King
These days, when you want to reach more customers, leaving leaflets under car windshield wipers just won’t cut it. More and more people are buying online, favoring purchases from their computer or mobile device, at any time of day. If you want to expand your offering and increase your sales, it’s time to go online.
This article isn’t aimed specifically at taking you online, but we have some great resources that are. Whether you’re just entering the eCommerce space, are curious what things are paramount to consider for your online store, or are ready to take your business to the next level by implementing SEO best practices and strategies that will ensure potential customers can find you, we have insights to help you out.
Having a comprehensive website to provide your products and services is key to ensuring you don’t get left behind.
Encourage Bulk Purchases and Repeat Customers
Armed with your sellthrough data and your eCommerce site, you can begin to entice your customers to purchase more items by creating bulk purchasing options. Consider which items are often – or could be – purchased together, and offer them with the click of a single button. By bundling these products (or a product + service) together, you’re making it easier for your customers to purchase multiple things, with less steps.
Another key opportunity is upsells. Many online shopping carts have an opportunity for listing items that could be considered as complimentary, or that “others often purchase”. By making additional (and relevant) product suggestions, you encourage customers to consider adding more items to their cart.
A customer loyalty program works wonders for encouraging shoppers to return again and again. By capturing email addresses and creating a mailing list, you not only have an opportunity to stay in touch with offers, sales, and announcements, but you can present exclusive discounts to members. Some stores also offer discounts based on repeat business – whether tracking purchases and giving a discount after a certain quantity or value has been purchased, or providing a discount code once a purchase has been made, which can be redeemed in a future transaction.
Market Yourself in the Market
Now that you understand your business, and you’ve brought it to the world through the power of going online, you’ll need to do a little more than sit back and wait for the orders to flood in. Marketing is key to getting your message out, and making sure you not only reach people, but you reach the right people – that is, those most likely to buy from you.
- Start by setting up social media accounts, and adding photos and content there to show what your business has to offer.
- Next, ensure you’re listed on Google Maps – especially if you have a storefront.The best way to start is by going to https://maps.google.com, and checking your listing. Is all of the information current, relevant, and accurate? If not, claim your business and make the necessary changes.
- It’s a worthwhile investment to sign up for a newsletter service, such as MailChimp or Constant Contact. By collecting email addresses and crafting mails, you’ll be in touch with your customers (and potential customers) who have signed up to receive messages from you. This is a great opportunity to announce products or sales, provide exclusive discounts, and generally stay in their mind through their email inbox – just be sure to have a purpose in your messages, so your contacts don’t feel bothered by nagging mails.
Digital Marketing is a big world, and there are many other angles you can use to address your market and share your offering with more people, such as ads on Google or social media platforms, and tuning your SEO strategy to be sure you display in search results. Have a look at this great article about Digital Marketing Basics for Merchants, which give you some key things to consider when developing your digital marketing plan.
Knowing your business – particularly, your product offering and customer set – is key to improving your cash flow. From there, you can optimize your inventory, incentivize customers to purchase (or purchase more), and wisely invest in marketing strategies to reach more potential clients. Increasing your cash flow doesn’t have to be overwhelming. Just remember, knowledge and strategy reign supreme.
See our other articles in the cashflow series: