How to make the most of money when sales are down?

A constant rise in sales is elusive. Despite the fact that your product is stellar and your marketing strategies are commendable, you cannot expect your sales to be consistently as high as possible. Various factors influence the sales volume every month, out of which some are unavoidable, and others include how reputable your brand is, the quality of your product, how you resolved queries of your prospects, how soon you managed to deliver your product to them, and the like.

Cash is fuel for business. Every entrepreneur is advised to have earmarked cash in case they run out of money due to poor sales. Sales could plummet at any time without any telltale signs. You cannot stop incurring some expenses to keep business operations running. What if your sales are getting down and your earmarked cash is also shrinking?

You cannot sit back and wait for sales to be up automatically. Instead, you will have to take some actions to ensure that you do not run out of money in adverse circumstances. This will preclude your business from grinding to a halt.

Ways to make the most of money when sales are down

Here are the ways to make the most of money when sales are low:

Identify the cause

First off, you need to identify the cause of low sales. A golden rule of thumb says that you should know exactly what the reason is behind plummeting sales. This will help you know whether it is an unavoidable reason or not. Not always are there external factors that influence your sales badly. There are many internal problems that you will have to fix in order to push sales.

Talk to your sales team and ask what challenges they have been facing in pitching clients for their products. Sit together with your customer support team while making any decision because they know your customers inside out.

• Maybe your product is not of high quality compared to your competitors.

• Maybe you have got a new competitor taking the market by storm by adding new features to the same product to make it unique, advanced, and, above all, better.

• Whether your customer support team is able to address the concerns of your clients appropriately. Sometimes, a lack of knowledge and impertinent behaviour could affect your sales by prompting your clients to leave you for your competitors.

• Your product is way too expensive compared to the pricing by your competitors.

Once you have identified the case, you can easily make a strategy in order to improve sales.

Negotiate with your suppliers

It is not easy to identify the cause of sales. Sometimes, it is affected by external factors that you cannot control. If this is the scenario, you will have to think of other ways to have some cash coming in to meet all your business expenses. Under no circumstances does it suggest that you should borrow money because if you take out a loan, you will have to pay interest on top of what you borrow. This will increase the pressure on your finances, even if you are on monthly repayment loans.

Here comes the role of focusing on ways to retain some cash. For instance, if you supply to your customers on credit, try to scrap this system if sales are too lethargic. If you cannot, you should try to reduce the payment period. For instance, if your customers are to pay invoices within a month, you should reduce the length to 15 days.

At the same time, you should focus on suppliers’ payments. Try to negotiate with them if they agree to offer some discounts. This will increase your profit margin. If you can buy a large amount of inventory, you should seek discounts. This will help you avail yourself of some discounts.

Monitor inventory

One of the biggest reasons for disrupted cash flow during poor sales is that you overstocked inventory. Inventory management is vital when it comes to having a smooth flow of cash. Unfortunately, small businesses fail to track an adequate amount of inventory and end up blocking money in it, leaving less cash to meet business expenses.

Even if you could get hold of some inventory at a discounted price, you should not overstock if you know you will not be able to clear within a given time period. Overstocking of inventory that does not sell fast means you will end up losing money over time. Not only will you struggle to meet your business expenses and be forced to take out high-cost business loans, but you will also lose money in terms of expiration and misplacement.

Get rid of slow-selling products

It is likely that you have loads of high-margin products that take too much time to sell. In order to make high profits, you might decide to keep them on the shelf, but there is no point unless they are sold. High-margin products will benefit your business only when they are sold. Otherwise, only money is blocked.

There is no point in keeping these products if they take forever to be sold. You should instead focus on products that are sold quickly. Even if they do not yield high profits, you can make a lot of cash by selling a lot of items. This technique would preclude you from dipping into your reserve cash.

Increase prices

Maybe this is the time to increase prices. It is likely that you have some products that are underpriced. You should evaluate the pricing strategy and increase the prices of those that are underpriced. It is crucial to charge competitive prices, but at the same time, it does not have to be too low.

The final word

If your sales are down, you should figure out ways to retain some cash on hand. Do not forget that your business will need some money constantly to meet essential business expenses. By using the aforementioned tricks, you can make the most of money during poor sales.