Editor’s Note: Here at Dispatches, we are always looking for ways to help our readers do things. For some of our readers, that means helping navigate the working world, for others, it means assisting in the ever challenging question, “what’s for dinner?” For still others, it means figuring out how to balance family life with everything else. In an effort to aid in all of these endeavors, we have collaborated on this article written specifically for our readers.
There’s nothing more soul crushing than hating your job. Most of us spend more waking hours at work than we do at home, and if it isn’t a good fit it can cause stress and anxiety. We spend more time with our work colleagues than with our friends, family and loved ones. So if the workplace is a hotbed of malicious gossip and endless shop talk, you might feel alienated and as though you’re unable to be yourself. If you’re experiencing these feelings before you throw in the towel consider talking to your supervisor or Human Resources director.
If you’ve already been considering working for yourself and have created businesses either as a side hustle, a home business or as a full-time career, then you might consider trying to make it full time. In order to stay afloat, entrepreneurs need to make sure that their businesses stay agile, coping with day to day issues as they arise while anticipating tomorrow’s challenges. And that can only come when you have strong liquidity.
What is liquidity and why does it matter to my business?
Liquidity is cash and cash is liquidity. Every business, even small businesses existing solely in the digital realm, have overheads. If these overhead costs are not met, your business cannot function and will become mired in a swamp of debt as you struggle to meet your obligations to your customers and your creditors. In order to keep your business moving forward, you need to maintain a healthy cash flow. But this is often easier said than done. Sometimes customers and clients don’t pay their bills on time but the lights need to stay on and employees need to be paid. Sometimes businesses have slow months. But if you’re taking steps to create liquidity for your business, you stand a much greater chance of staying one step ahead of the competition. Here are some ways in which you can create liquidity.
Grow your own capital
Lots of entrepreneurs invest their own capital in their business, and so long as you are mindful of your limitations, it can be an easy way to ensure easy cash flow. Just remember that your own capital is a finite resource. As such, it behooves you to take steps to grow your own capital. This could be done through savings or investment. Given the anemic rate of interest offered by most banks (usually around 0.06 percent), it’s usually a good idea to compare against credit unions and online savings accounts. These can provide a more favorable interest rate as they have fewer overheads than a traditional bank. But even a great savings account, while low risk, is unlikely to grow your capital meaningfully. You should also consider investing to stand the best chance of growing your capital. Seasoned investors know that a diverse portfolio consisting of stocks, forex and (if you are brave) cryptocurrencies may be the best way to grow. If you have limited free time, you might want to consider using algo trading platforms which do the work for you. If you have a healthy pot of your own capital to dip into in times of crisis, you stand a great chance of maintaining liquidity.
Throw a sale that’s too good to miss
Sure, profit margins are important, but it could be better to make lots of low margin sales than no sales, check your numbers. A sale is a great way to generate interest in your brand and attract a high volume of custom. Be sure to incorporate some customer retention strategies so that they’ll keep coming back, even when your stock reverts to its usual pricing.
Get a bridging loan
The financial services industry understands that all businesses experience issues with liquidity from time to time and have developed a range of products to help them with temporary cash flow problems that enable them to keep their heads above water. Bridging loans can be useful in keeping your business afloat while you await your next big payment. Be aware, however, that bridging loans often come at high rates of interest, so they’re only effective as a short-term solution.
Scourge your business of unproductive assets
Everything you spend your money on in business should be there to help you make money. Everything from your stock to your employees is there to help you facilitate profits. Thus, if you have assets that are unproductive (i.e. unprofitable) you need to jettison them before they continue to drain your liquidity.