Agency cash flow: how to become cash flow positive

The agency’s cash management is difficult. The best way to take control is to identify your best sources of recurring revenue and cut unnecessary expenses.

Running a business is difficult. Running a business that primarily sells people’s time and skills is also difficult. Put the two together and you might wonder why you decided to start an agency in the first place! But then you remember that you’re blessed with a once-in-a-lifetime opportunity to create fantastic work, spend time with amazing people, and make a real impact on your clients’ businesses.

Your biggest challenge is probably cash flow, and if so, it might reassure you to know that you’re not alone. According to to research, the reason most small businesses fail is cash flow management. This includes poor cash flow management, starting with too little money, and not having an elaborate business plan.

And it’s not just small businesses that are hurting. Many established businesses have collapsed under the weight of cash flow problems. Of course, “selling more” is the obvious answer, but it’s usually not that simple, because selling more means investing more.

Fortunately, there are a few quick wins your agency can implement today to regain control and put you in a positive cash position.

Find out more in our new Zen Agency Cash Flow Guide – you can get a copy here.

Cash flow vs income, which is more important?

Many agencies seem to focus on annual revenue or their “book” value, and that’s understandable, especially when acquisition is the goal. But, like some experts point out, the problem with using revenue as a measure of value is that it does not take into account the cost of generating revenue. Cash flow is a much better indicator of the quality of an agency’s profitability, which ultimately is what owners and potential buyers are really interested in.

How can you increase your cash flow?

You can find out more by downloading our guide, but here are some of the key factors to consider:

  • Try to work on installments, to ensure a steady stream of income each month
  • Review your pricing
  • Micromanage your expenses
  • Learn to forecast with precision
  • Ask for 50% down payments on large projects
  • Streamline credit control

Don’t let cash flow issues strangle your agency

With the right understanding, guidance, tools, and processes, you can take control of your agency’s cash flow issues and build a bright future.

Get started with these handy tips.