Cash flow is the lifeblood of any small business. But it can also be one of the biggest challenges. Whether you’re dealing with unexpected expenses, seasonal fluctuations or just the daily ups and downs, managing your cash flow is critical. To help you navigate those tricky waters and keep your business on solid financial footing, here are seven strategies for surviving cash flow challenges.

1. Forecast your cash flow 

Think of cash flow forecasting as your financial crystal ball of sorts. By projecting your cash flow for the weeks or months to come, you’re able to anticipate shortfalls and take action before problems appear. To get started, review past financial statements to see if any patterns exist. Then, create a spreadsheet to track your expected income and expenses. This proactive approach will help keep you ahead of the game. 

2. Cut unnecessary expenses 

When cash flow gets tight, it’s time to start pinching pennies and scrutinizing every dollar that goes out the door. Review your expenses and identify where you can start trimming the fat. Every little bit helps, so pinch those pennies until they scream! 

3. Negotiate with suppliers 

Don’t be afraid to negotiate! If you’re facing cash flow challenges, contact your suppliers to see if they can extend your payment terms or apply discounts for early payments. (The answer will always be no if you don’t ask.) Many suppliers are willing to work with you, especially if you have a solid working relationship. A little negotiation can make way for some breathing room. 

4. Establish a cash reserve 

Every business needs a safety net—this can be accomplished with a cash reserve. Be sure to set aside a portion of your profits during good times to help you weather the storm when things get lean. Aim to build a reserve that can cover at least three to six months of operating expenses. It will take time to build up a comfortable reserve, but it will give you peace of mind and flexibility when cash flow issues arise. 

5. Accelerate receivables 

Waiting on payments can kill your cash flow. To speed things up, consider offering early payment discounts or setting up automatic payment options for your customers. Also, review your invoicing practices to ensure you’re sending invoices promptly. The faster you invoice and the easier you make it to pay, the faster you’ll get paid! 

6. Diversify your revenue streams 

If you’re relying too much on one revenue stream, it can put your cash flow at risk. Consider diversifying your income streams to create a more stable flow of money. This could include launching a new product line, offering complementary services or possibly even renting out unused space or equipment. The more revenue sources you have, the less impact a downturn in cash flow can have on your business. 

7. Seek professional advice 

Sometimes, cash flow issues require more than just a quick fix. Don’t hesitate to consult with a trusted financial advisor or accountant who specializes in small businesses. They can offer insights tailored specifically to your situation, help you explore additional financing options, and provide strategies to optimize your cash flow management. Investing in expert advice is a win all around. 

Keep that cash flowing 

Surviving cash flow challenges is all about being proactive, resourceful and flexible. Following the strategies above (especially number seven) will help you stay well-equipped to manage any financial roadblocks that may come your way.