Six steps towards a better cash flow
By Robert Faletra
 Cash flow is always a problem for solution providers, and in tough times like these it can be a killer. Here are six points that can help you deal with this important issue.
First off, the fewer pieces of equipment you take title to the less risk you put yourself in. So consider the influencer model more in this market. Tell your customer what to buy and where to buy it. But it's critical to manage the process and work the vendor programs that reward influencers on the back end. It takes more paperwork and it means working with some vendors over others, but the alternative is increased risk to your business by tying up your cash.
Get back to basics in your sales model. It's a numbers game in this market. If your sales team makes 50 sales calls this week and your competitor makes 25, you are going to likely win more deals. The opposite holds true and the survivors are going to be the players that are looking to expand their customer base.
Increase the leads funnel. If all you focus on is your current customer set, you are taking a risky tactic in my opinion. In this economic downturn, you need to be focused on taking market share and understanding that there will be fewer deals struck—and many may be smaller than you would like. So look to get leads from your vendors.
Be a relentless cost-cutter. There are always ways to cut more costs and sometimes you need to send a message that gets across to your entire team by doing simple things. It might be taking the fluorescent bulbs out of every other overhead light fixture in the office that gets your team to understand your focus and makes them realize it's everyone's job to do the same.
Understand what your margin is for everything you do. This will take some work because it isn't just the price you get for a product minus what you pay. You have to look at handling installation and other pieces of it. If a product allows you to get more services revenue, the margin might be higher than on a product you get more for but can't wrap services around.
Finally, question and compare your total profit to other standards in the market. We have data points here at Everything Channel as do many of the vendors that have done profitability studies. You want to at least be hitting the average on this line. If not, you have to get to the bottom of it and, again, resources here or with your vendor suppliers can help. In the end, these practices will help not only in a bad market, but in a good one as well.
How is your cash flow in this tough market? |