You may have come across this quote by t. Harv Eker.
“Where attention goes, energy flow and results show”
So, if you want to create cash flow, you need to pay attention to it.
How to go about it, you may ask.
To create cash flow, you need clarity first because clarity leads to focus.
If you are reading this section without going through the clarity section,
I highly recommend you do that.
Robert Kiyosaki, the author of rich dad, poor dad, once said: “if keeping money in your business is your problem, making more money will not solve the problem.”
So if you haven’t gone through the cash flow control section, go through the cash flow control section before diving deep into cash flow creation. This is important because if controlling cash flow is your problem, then creating more cash flow won’t solve your cash flow problems.
Now that you have gone through cash flow clarity and control sections let’s look into cash flow creation.
Why follow clarity and then control and creation in order?
Without clarity of cash flow, you don’t know where to control cash flow, and if cash flow control is your problem, creating more cash flow will not solve your cash flow problem.
This is out of the way.
Let’s get started with cash flow creation.
What is cash flow creation?
Cash flow creation or cash flow improvement is a process that helps create consistent cash flow in the business, even if the sales have slowed down and when the sales are not happening.
So, how do you create cash flow, and how do you maximize cash flow?
To create and maximize cash flow, you need to understand what increases cash flow. In other words, understand the activities that increase cash are?
To increase cash organically without external help, you have to increase sales.
Here are four ways you can increase sales.
- Increase the frequency of purchase
- Increase average order value of sales
- Increase the number of customers
- Increase revenue streams
More sales = more cash flow
As long as you sell more, get cash for that sale and pay less than what you sold it for to deliver it, you will create a positive cash flow.
Is there no way to create cash flow other than selling more?
There are, and you use them where it is impossible to sell more.
Imagine a situation where there is hardly any cash left to invest in marketing. Without marketing, you can’t generate leads. And, let’s face it, without leads, there will be no sales. Without sales, there will be no cash flow. In such a situation, when the sales are slowing down or not happening, you need to look into other areas of cash flow creation.
What are the areas other than sales to create consistent cash flow?
If you solve the cash flow improvement puzzle, you can build an uber profitable business that rains cash every month instead of sucking your time and energy and leaving you with not much to show in your bank account at the end of the month.
In this section, you will learn how to ace cash flow improvement and increase your cash flow by applying cash flow improvement strategies, even if there are no sales.
You do it by improving cash flow in three sections.
They are :
- Cash flow from operations
- Cash flow from investing activities
- Cash flow from financing activities
Let’s look at the first one.