Many people start an online business and wait months before they start earning money. This is disheartening because they struggle to convert visitors, they struggle to rank for their keywords, and even more they struggle to pull traffic. Here are some ideas for getting started.
While it’s important to spend time on building your brand and generating sales leads, it’s downright vital to quickly cultivate a steady stream of what accountants call “free cash flow” — that is, the amount of cash coming into your company over and above all of your expenses. After all, if you don’t have money, you won’t be around long enough to worry about those other things.
If possible, keep 10 percent to 20 percent of monthly revenues on hand because at that point, in most companies, you’ll be able to reinvest into the growth of your business — from purchasing additional product or service lines to roping in more suppliers or even building up your team when you need to.
Here are five ways to keep cash flowing consistently into your business:
My view? Never discount. But if you do, know the costs and impact of what you’re offering and be prepared for the fallout. Among other things, you’ll need to know your overall cost basis.
My view? Never discount. But if you do, know the costs and impact of what you’re offering and be prepared for the fallout. Among other things, you'll need to know your overall cost basis. Click To Tweet
You should also know how much you should ideally charge, the cost of your offer and the profit margins on your product or service. How else will you know if you are operating at a profit or loss? To do the math, see our break even calculator.
Even though discounting isn’t always recommended, adding value is. By creating bundles of products or services, for instance, businesses can inject tremendous amounts of perceived — and tangible — value into their offerings for very little cost.
A good example is the maintenance agreements some car manufacturers do provide with the purchase of a new car. Not only does that type of offer help allay a major concern or frustration customers have — paying for a breakdown or time lost at the dealership — it also offers real value in terms of limiting out-of-pocket maintenance costs.
Put more simply, you can increase your price point initially since you’ve helped lower a perceived risk by offering something as basic as a guarantee.
If you know your initial offer to reel in new customers won’t be profitable, find ways to create higher price points on back-end products or services.
Perhaps the first hour of catering is free, but subsequent hours shoot up in price. Or maybe an attorney will agree to draft your will for less if she thinks you’re a likely candidate for estate-planning consultations in the future.If you know your initial offer to reel in new customers won’t be profitable, find ways to create higher price points on back-end products or services. Click To Tweet
If you’re in a volume-driven business like retail, landing repeat shoppers is your holy grail for cash flow, profit and growth. In most cases, you won’t start to profit on a customer until the third, fourth or even fifth transaction. For this reason, you need to devote your efforts toward getting customers coming back — and more often.
Consider loyalty programs, VIP offers and other frequent-shopper programs, which can be ideal vehicles for systematizing repeat business.
Also keep in mind that the word “free” is a popular incentive among shoppers, and the costs of funding a freebie may easily be covered as long as you’re dealing with excess inventory or low-cost, but valuable add-ons.
For owners who want to encourage sales sooner, pre-sell your products or services. You might couch the pre-sale as a way for consumers to plan for their future or get a jump on shopping. You can also offer to take old, outdated products back at a pre-arranged price.
Are you a new business owner and do you think you need that extra cash?
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