Do You Own a Small Business? Here’s How to Hoard Your Cash

Running out of cash in your business can make things really tough. However hoarding cash can help make your money stretch further. Let’s take a look at eight ways.

1. Pay less for credit card processing

If you use a processor, chances are that you pay them too much and are therefore wasting your business’ precious cash.

Generally, you can save a large amount of money by buying your own processing equipment. Ensure that you solicit a number of bids to get the cheapest price possible.

2. Stop paying for equipment you don’t need

Next time you need some cash, take a look at what you own and sell absolutely everything that you don’t need. You should be able to cancel leases on equipment you don’t essentially need and return it.

If the vendor is reluctant to comply, don’t be afraid to involve a lawyer, who should be able to explain to them that without quick cooperation, your business might fail (meaning they would receive no further payments anyway).

3. Sublet unneeded space

If your contract allows you to do so, you should rent out any unused space as soon as your business downsizes.

Don’t rule out your competitors, either – even fiercely competitive retailers can successfully survive side by side through combining office or manufacturing operations.

If your business is losing money, your premises may be your most valuable asset, so you should make certain that it’s producing every penny that it can.

Just ensure that you get any necessary permissions from your landlord first.

4. Call the landlord

While you’re at it, renegotiating a lower rate of rent may be on the cards.

This is rarely easy, but if you know that they may struggle to find another tenant, and especially if the contract will be up to renewal soon, your chances of succeeding will be significantly better.

You have nothing to lose from trying – a landlord who sees that your business won’t survive without a rent reduction may be willing to accommodate you.

There are several options to negotiate, one example of which could be to suggest a lowered rate of rent for the next year, with an agreed increase to kick in if and when your sales return to normal levels.

Be careful, though; agreeing to a short-term rent reduction in trade for a longer time commitment is dangerous, as you can’t know for certain that the adjustment will be enough to keep you going.

Personal guarantees are also very risky to your personal credit.

5. Stay close to home

If your business travels significant distances, try to cut it in half at least.

This will force you to focus on cutting out the less profitable trips and spending only on trades that are worth your while.

6. Cut back on insurance (cautiously)

Increasing deductibles and cancelling non-essential coverage for things like business interruption or the death of a key employee is advisable when you’re low on cash.

However, if you are a sole trader or one half of a partnership, you will be personally liable for your business debts.

The last thing you want to do in any case is eliminate essential insurance coverage for fire, theft, and liability.

7. Ask for discounts

You’ll be surprised at how many suppliers will lower their prices when they are hungry for business, but they’re not going to volunteer the lowered rates unless you initiate negotiations.

When times are tough you should not have to think before shopping around and buying in smaller quantities.

8. Renegotiate contracts

Negotiating your way out of contracts is always an option when you’re struggling to buy what you have promised to.

If you are able to pay a reasonable buyout fee, doing it this way is the legal, honourable and practical route.

Remember that the other party is likely to be happy to accept a partial payment from you if the other option is no payment at all if your business goes under.

If you are struggling to pay your bills, your company may be insolvent and you could be accused of wrongful or fraudulent trading if your business continues to trade.

Make sure that you seek professional advice if you need to discover what your options are. We’re just on the end of the phone; 01472 254914.