Cash flow is very important in your pharmacy business. If you have problem with your cash flow, it can be a terrible experience. It will become very difficult to meet your financial obligations to your suppliers and employees as well as any other creditors.
In this post we discuss strategies that will help your pharmacy business continue to have good cash flow
- Make realistic projections: When you are at your planning stage, you make projections especially as regards your finances. If you make a mistake here it will affect the outcome of your business. Sometimes we are tempted to make grandiose projections which could eventually backfire. We must be realistic when we make projections. We must consider all aspect to the business before making projections. We must gather enough information and be modest in our expectations. If our projections are realistic, we can be sure that we cannot run into trouble with our cash flow.
- Think well before spending: You will always be making one expense or the other in the course of your business. When you make these expenses, you must think on the appropriateness of these spending. You should think through every transaction before your conclude on it. Do not allow emotions take the better part of you when you make any spending. You should rationalize the expense before you make it. Once you stop spending frivolously you can give your business a positive cash flow.
- Plan your inventory carefully: Your inventory is the singular biggest expense most businesses incur. In your pharmacy business, your inventory is your business. You should be strategic when you stock up your business. You need to plan your inventory properly. Many pharmacists tend to overstock and this is a bad practice. You should understand the need of your customers and stock accordingly. For a new business, you need to be more careful because you are still studying the market. I see a lot of pharmacies stock up large quantities of some drugs and end up expiring on them. Buy in small quantities and replace stock once they go down. Excessive inventory ties down your fund.
- Have a rainy day fund set aside: Every wise business owner will have an emergency fund. The unexpected can happen any day and it is wise to be prepared for such days of adversity. From the onset of your business, you must set aside a certain amount of money as contingency fund. You should continually add to this fund regular to build a strong base. This money is not just for times of trouble, it can be used to fund any opportunity that may come up in the future.
What other ways do you think a business can improve its cash flow?