5 Things You Can Do Right Now If You’re in a Cash Flow Crunch (And I’ve Been There!)

Real-World Strategies to Keep Your Handmade Business Moving When Finances Are Tight

As handmade sellers, we’ve all been there—the dreaded cash flow crunch. Whether it’s due to slow sales, unexpected expenses, or seasonal dips, the pressure can feel overwhelming. I’ve faced my fair share of tight financial spots, and over time, I’ve learned a few practical steps to ease the situation without panicking. Here are five things you can do right now if you’re in a cash flow crunch.

1. Sell Off Slow-Moving Inventory

When cash is tight, look at your slow-moving or unsold inventory. Instead of letting it collect dust, run a quick flash sale or bundle items to generate fast cash. Sometimes, even breaking even on these products can bring in the money you need to cover immediate expenses.

Real-World Example: I once had a collection of seasonal gift boxes (12 of 12 designs = 144 units) that didn’t sell as expected. Instead of holding on to them until next season, I ran a 24-hour flash sale for Mystery Boxes with a discount. I went live showing us packing them + posting while they sold. They all sold within 30 minutes-- and people bought a lot of product! It not only cleared out space in my inventory but also gave me enough cash to cover expenses for the next 60 days.

Action Tip: Use your email list, group or social media platforms to announce a limited-time sale. Flash sales can create urgency and help you generate quick revenue.

2. Negotiate Payment Terms with Suppliers

If you’re running low on cash but still need materials to fulfill orders, reach out to your suppliers. Ask if they can offer extended payment terms or provide a discount for early payments. Many suppliers are willing to work with small business owners, especially if you’ve built a good relationship with them.

Real-World Example: During one cash flow crunch, I called my packaging supplier in China and negotiated a 90-day payment term. They agreed, and it gave me the breathing room I needed to make a few more sales and pay the invoice without dipping further into my reserves to order a new supply of packaging.

Action Tip: Don’t be afraid to ask! Sometimes, suppliers are more flexible than you think.

3. Focus on Your Best-Sellers

When cash is tight, double down on what’s working. Focus your efforts on promoting and selling your best-selling products, as these are likely to generate quick and reliable sales. Hold off on experimenting with new products or spending on non-essential supplies until your cash flow stabilizes.

Real-World Example: One holiday season, I found myself low on cash but with high demand for my best-selling fragrance collection. I paused production on newer, less popular products and channeled all my resources into fulfilling and promoting the current collection. This kept cash coming in and allowed me to stay afloat during a tight season.

Action Tip: Run targeted ads or email campaigns highlighting your best-sellers. Remind customers why they love these products and how they can solve their needs right now.

4. Offer Pre-Sales or Custom Orders

If you need quick cash but don’t have the inventory on hand, offer pre-sales or custom orders. Let your customers know that their purchase helps support your small business, and they’ll receive their items in a few weeks. People love supporting handmade sellers, and pre-sales can be an easy way to generate immediate revenue without having to front production costs.

Real-World Example: When I launched a new line of candles in custom vessels, I didn’t have the funds to produce a large initial batch. I offered a pre-sale with a discount, letting customers know they’d receive their candles in 3-4 weeks. The pre-sale brought in enough cash to fund the entire production run.

Action Tip: Create urgency by offering a limited number of pre-sale or custom slots. Promote it as an exclusive opportunity for your loyal customers to get their hands on your newest products.

5. Cut Non-Essential Costs

When you’re in a cash flow crunch, it’s time to review your expenses. Are there any non-essential services or subscriptions you can pause or cancel? Take a hard look at where your money is going and temporarily cut back on anything that isn’t directly tied to production or sales.

Real-World Example: During a slow month, I realized I was paying for multiple software tools and services that weren’t critical to my business at the time. I paused a few subscriptions, which gave me extra cash flow to reinvest into more important areas like product supplies and shipping.

Action Tip: Review your expenses and subscriptions at least 2x a year. Identify any tools, software, or services you can put on hold until your cash flow is back on track. Bonus Tip: Leverage 0% Interest Credit Cards

If you’re in a cash flow crunch, a 0% interest credit card can be a temporary lifesaver. These cards often offer an introductory period of 6 to 18 months with no interest, giving you time to cover essential expenses like supplies or equipment without worrying about immediate cash flow. Just be sure to pay off the balance before the interest kicks in to avoid high fees down the road.

Real-World Example: During one tight period, I used a 0% interest card to purchase a few pallets of wax that were heavily discounted. Did I need them right then and there? No. But it would save 20% on production cost over the next year. By the time the interest-free period was up, I had enough cash flow to pay off the balance, and I avoided any unnecessary debt.

Action Tip: Look for credit cards with 0% interest offers and use them strategically for purchases that will directly lead to sales. Make sure you have a repayment plan in place to avoid future financial strain.

Conclusion: Cash Flow Crunches Are Temporary

Being in a cash flow crunch can feel stressful, but it’s important to remember that these challenges are temporary. By focusing on quick wins like clearing inventory, negotiating with suppliers, and doubling down on best-sellers, you can pull yourself out of the crunch and get back on track. I’ve been there, and I promise you—there are always ways to navigate tight financial situations.

Question: Which of these strategies will you try today to improve your cash flow?