Cash is king. Always.
If that’s the case, why don’t more shops do a better job of managing their money? The level of money in your bank account can help your business grow and thrive.
It’s common sense.
Cash in your business churns into payments to make your business run. You need garments. Ink. Thread. Payroll. Overhead.
Let’s face it, it’s a long list. There are plenty of mouths to feed.
Negative Cash Flow
So then why aren’t more shops doing a better job at getting 100% of the money for orders upfront? What is more common is what is called Negative Cash Flow.
This is where you have more cash going out that coming in. The problem typically strikes the hardest when you are the busiest.
You have to buy more shirts. Spend more on labor. Work later hours even.
But then you are still waiting for your money from your customer for a few weeks. (or more!)
It’s a constant game of catch up.
Flip the Script on Cash Flow
But it doesn’t have to be that way.
More shops than ever before are changing the way they do business by getting 100% of the money for orders upfront. They see how bigger companies like Amazon or Custom Ink work, and are adopting policies that mimic these giants.
Which is what’s fantastic about building a suite of online stores. When customers order, they are paying for their goods in advance.
It is literally “money in the bank”.
A New Strategy
Think about it.
Let’s say you have a client, ABC Plumbing, and they order shirts from you a few times a year. Normally, it’s the same Safety Green shirt with a one color front left chest and a one-color back. Usually, the order is about 48 pieces.
Take a minute and create an online store for them. The first thing you add is that Safety Green t-shirt that they always order.
But, you also add a few other things.
A long-sleeve version. Maybe a hoodie. These can get the same imprint as the t-shirt.
You then also add an embroidered sport-shirt, a trucker cap, and a jacket to the mix.
Now when they order for next quarter, they see all the new items and add a few to the mix to try them out. Right after those are delivered, they immediately put in a reorder as other folks at that business like what other staff members are wearing.
Now, not only have you increased your revenue for the order, but because the order originated with your ABC Plumbing online store it was paid upfront.
Therefore, you have all of the money for the order for the shirts. To pay your crew. And to pay other shop expenses.
Let’s not forget that because the order came in through one of your online stores, that it already is in your system. No double entry.
Using InkSoft Core, coupled with the online stores means that essentially your customers are doing your order entry for you. All you have to do is set up the online store for them.
Other Cash Flow Tips
How you manage cash in your business allows you to grow faster and operate from a position of strength.
Let’s say that you are getting the money upfront (good for you!)…what other tips can help with how you manage your money?
- Have a prepared and branded policy on payments that you can send to customers when they have questions.
- Find out if there are discounts for paying your bills early. If you have the money in the bank, here’s a way that you can reduce your operating expenses to drop more money to your bottom line.
- Set up ETF payments. This is faster than sending a check, and you can hold onto your cash longer.
- Build up cash reserves. Ideally, at least three or six months, but a year’s worth of cash is better. Know your numbers. Who knows what the economy might do?
- Reduce unnecessary expenses. At least once a year take a hard look at where you are spending your money.
- Keep up with your debt. How much money do you owe? Monthly payments restrict your free cash flow.
Cash Flow and Growth
So why is this important?
Simple. A strong cash flow position allows you to have more comfort and capability to invest in the future of your business.
It’s easier to make decisions when the piggy bank is full. Much harder when it is empty.
Take the steps necessary to get your shop into a position where you have solid cash flow and can operate in a strategic, positive way…rather than a defensive, reactive way.
The starting point for this is getting your customers to pay in full for their orders. Your shop is not a bank.
Think about how other industries work. Your customers have to pay upfront to get on an airplane, attend a business conference, order from Amazon, or even get an Uber.
Get paid. Now.
You are worth it!