In the course of every business, economic shifts will generate new challenges that leave leaders answering two pivotal questions for maintaining business continuity:
- How do we protect and maintain cash flows?
- What, if any, changes are needed to the workforce?
These two questions are tightly intertwined. Payroll and benefit expenses usually put the most pressure on cash flows.
A business that seems to be successful may fail because of poor cash flow management, and, if poor cash flow doesn’t put your business at risk, it might hurt your potential to grow.
When you’re a new company, it becomes tough to recruit top talent without breaking the bank. Company can’t always match market salaries, but they need exceptional (expensive) talent in order to build from scratch and create a business environment that is fruitful for both i.e. the employees and the company as well.
There are some of the strategies which can be used and proved helpful for the businesses whether it’s an early-stage startup with limited funding or a more mature organization that has a restricted budget.
These strategies will help you squeeze more value out of each rupee you spend on compensation and minimize the cash at risk.
One of the best tried and tested strategy to overcome the problem of reduction in cash flow/ a cash burn situation for the companies that takes place because of putting in the liquidity in the remuneration of employees is issuing ESOPs i.e. “Employee Stock Option Plans”.
This is because, by issuing ESOPs:
- The Company won’t run out of cash.
- The Company can purchase all the raw ingredients it needs to fulfill its orders because of improved cash flows.
- Availability of enough cash reserves to meet up the unexpected expenses.
- Concentration on the business becomes more effective.
Thus, for building your business with the help of improved cash flows in the organization by preventing the company from running out of liquidity so that you can always say yes to growth opportunities, please contact the undersigned:
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“Don’t try to be the ‘next.’ Instead, try to be the other, the changer, the new”
This is because knowing what it takes to get your company in the black gives you clarity about how much cash you can burn.