There are some excellent opportunities to be had in the digital commerce sector since online shopping has grown hugely and continues to do so. However, building a business in eCommerce can be very challenging since so many people are doing the same thing, and competition is fierce.
If you want to give your venture the best shot at sticking around for the long term, it’s imperative to manage the business cashflow well. Read on for some ways to do this effectively in 2022.
Carefully Track Incomings and Outgoings
First, keep a close eye on how much money is coming in versus how much is going out. While this will change week to week, you want to aim to have a surplus as much as possible. These days, being able to tell the financial position of a venture at a glance is easier than ever, thanks to tech tools.
Accounting programs, budgeting apps, and other software can link to bank, credit card, and loan accounts, among other things, and automatically update data so you can always see where you’re tracking. Many tools feature visualization components such as graphs and tables, which makes it even simpler to understand your firm’s financial position and share such information with investors, partners, lenders, and the like. They will also run reports for you at the click of a button or two.
These sound perfect options for cash flow monitoring, but problems can inevitably occur in any app or software. Sometimes your chosen payment portals can crash, or your accounting software can be down. These could cause you inconvenience and lose potential customers, which could have a major impact on your finances.
To avoid this, you need to be careful when selecting tools to manage your finances. This is not only limited to your choice of software but also the payment portal.
Some online selling platforms have removed third-party payment gateways. For example, sellers on eBay can easily track their transactions through the internal payment portal of the platform. So if you have encountered PayPal problems in the past, you can try to find online selling sites with their own payment gateway, such as eBay’s Managed Payments system.
Cut Costs Wherever Possible
Another way to ensure your cashflow stays positive is to cut as many costs as possible. We often get excited about the opportunities that different projects, tools, or consultant assistance have the potential to bring our businesses, but in reality, such things can sometimes be a distraction away from our company’s primary purpose or turn out to be less ideal than expected.
As such, spend time every few months at least going through expenses to see areas where you might be able to cut costs. Stop spending money on things that don’t bring a solid return on investment. Also, look for ways to reduce your organization’s fixed costs. For instance, talk to your business landlord about lowering the rent you have to pay or look for better deals on electricity, telecommunications, and company vehicles.
Manage Inventory Better
If you want better cashflow, look at ways to manage inventory more effectively. Stay up to date on stocktakes, so you always know precisely what items you have on hand and keep an eye on things that are getting outdated, damaged, or simply not turning over much at all. Move these goods by discounting them, offering them as value-adds to customers as free gifts with a purchase, or package items up in good-value bundle deals to get some cash coming in for the pieces.
You also need to think about how to spend less money on getting stock in the first place. Proactive strategic purchasing tactics involve elements such as doing your research on suppliers, getting multiple quotes, and building solid relationships with firms, so they’re more likely to offer you first access to quality goods and better deals over time. Don’t be afraid of renegotiating prices and delivery costs, as well as payment terms, as this can all add up to significant cash savings.
Another great way to boost cashflow is to keep in mind that you don’t always have to have stock on hand for customers to buy it. Set up pre-order systems so that people can pre-purchase goods such as those you’ve run out of stock on and are waiting to replenish or new items you’re adding to your range.
Pre-orders help give you a chance to test out demand for goods before committing to manufacturing or purchasing them from suppliers. Send out newsletters or talk about new wares on social media and test the waters to see if you get much interest from clients. If you can tell that people aren’t very keen to buy or find the price too high, etc., you can avoid investing cash into these things. In turn, you’ll end up with fewer items sitting around gathering dust in your warehouse.
Some other tips to keep in mind for eCommerce cashflow include diversifying revenue streams as needed and setting up loyalty and referral programs to get clients buying more from you and recommending your store to others. Add one new strategy to your to-do list every week or month as suits, and you’re sure to see cashflow improvements before you know it.