Cash Flow Injection for Small Businesses

When thinking about promotions you need to consider profit versus cash flow. Although large amounts of profit per sale are a nice thing to have, if these sales are too far and between then your cash flow will be negatively affected.

Although promotions are likely to reduce profit per sale (as you are reducing prices), there will be an uplift in the number of sales which will then increase cash flow.

When deciding what types of promotions to carry out you need to calculate your breakeven point. Once you know this you can then decide on the level of discount per sale. This discount can be in the form of a percentage off, buy one get one free (Bogof) or similar strategies.

You will need to consider the length of time you want to run these promotions for.

You will need to look at how much cash you wish to generate from a promotion, how much stock you have available to meet the potential demand and then work out how many sales you will need to make.

Using this information, you should have a rough idea how long to run a promotion for.

Another thing to consider is what products/services you want to include in the promotion. Many businesses will use blanket discounts, meaning everything they sell is included.

While others will select certain products or services to include.

Both have their own pro’s and con’s. Offering blanket deductions can help with increasing sales as you are not restricting customers to certain products. This is a good way to entice the bargain hunters in your market.

However, you could be missing out on higher profit sales from those who initially interact with your business after seeing you are running promotions but would be prepared to pay more for certain products.

Offering promotions on certain products is a great way to get rid of old or under performing stock more quickly. Many seasonal traders use this method to make way for the next seasons stock.

On the other hand, bargain hunters may not be happy about the limited choice and try elsewhere.

Whichever type of promotion you use, you must ensure that it follows the legal guidelines for promotions.

The importance of marketing cannot be overstated. You may have a great product or service, but without your potential customers knowing about what you sell, you are unlikely to make substantial sales.

Marketing can take on many forms, such as social media adverts, online content marketing or offline marketing such as flyers, TV adverts and posters.

Most businesses will use a mix to reach as many people as possible.

Marketing can be expensive, which can be an issue if you are experiencing low cash flow.

There are many low-cost options available if you are willing to do the work yourself.

Online Marketing

Online marketing is extremely popular with many business owners as it is quick to implement and easy to update as you go along.

There are many forms of online marketing available, with some cheaper than others.

Depending on your level of skill, it is possible for you to carry out an online marketing campaign without any professional help, which can keep costs down even more.

Social Media Marketing

If you haven’t already you need to create social media accounts on platforms which your target audience are most likely to use.

• Make sure your profile, written content and images are clear on what you do and why your potential customers should use you.
• Use quality graphics and pictures that showcase your products and services properly, after all people shop with their eyes.
• Adding hashtags to your posts can increase reach for trending topics. People actively search for hashtag posts online, especially when it comes to twitter.
• Different types of people use different platforms, you will need to vary the tone and content you post on each.
• Use a mix of blogs, flyers and videos to keep your audience engaged.
• Post consistently so your audience will come to expect you to post something new. Using a set time and day to post your content is a good idea.
• But don’t over post, posting too much content in a short period of time can reduce the effectiveness of your advertising.

Paid Online Ads

Paid advertising is great way to generate clicks, clicks being visitors to your website. The most common business model is Pay-Per-Click. Although paid ads are a great way to gain traffic quickly, it can be expensive, especially in high competition markets.

You will pay for each click, regardless of whether you make a sale from it, and the cost per click (CPC) can be costly depending on the platform used, type of market you operate in and level of competition.

 

Offline Marketing

Offline marketing can be a great way to reach potential customers using flyers, billboard posters and printed adverts in magazines and newspapers.

Offline marketing tends to take a little longer to implement and isn’t as quick to update, for example updating pricing, as you will need to reprint and redistribute.

• As with your online marketing efforts it is important that you use quality graphics and pictures that showcase your products and services properly.
• You need to research the best locations to show your adverts, which magazine, postal addresses for flyers and footfall for billboard adverts.

If you are struggling to pay for your marketing, you need to maximise the returns on your investment. 

As mentioned most businesses will use a combination of both online and offline marketing to maximise exposure as cost effectively as possible.

You need to decide where and how to advertise, you need to consider your audience, budget and how flexible to change you need your advertising to be to make sure you are getting the most out of your money.

Whilst RLA Capital cannot offer financial advice, we can provide various small business loans to assist with cash flow.  RLA Capital would recommend speaking with your accountant if you are experiencing cash flow problems.