Talking Cents

Small business accountant in Melbourne: the balancing act between cash flow and profit

Cash is important to every business so that you can pay bills on time. But can you really decide if cash or profit is more important? It is all about balancing and related. A profitable business can better gain access to cash, however a “rich-cash” business might not be able to gain profits, as ways to do are more limited.

What should small businesses do when there is sufficient cash flow but little profit? Here are a few ways:

To increase profit, focus on profitable customers! Profitable customers are usually customers who are willing to spend. Upselling or recommending add-ons to them can help you to increase your profit figure. Remember to offer them products or services that will value add to them, if not it will just be hard selling.

Consider minimising your expenses to increase your profit. But do not over do this, spend what you have to; do not cut cost until it hurt your profit. Also, review your costs over the past months and compare with the industry benchmark to improve your financial situation.

If you are able to introduce new products, it could be the solution to pump up your profit figure in the longer term. Send direct emails to existing database and use your social media platforms to inform existing customers about your product launch.

For more useful tips and advice on how to grow your small business, contact us here at mas accountants, the original accountants for small business, servicing Sydney and Melbourne for over fifty years.