Every small business owner knows that the success of their company is dependent on their early investments to keep them as players in the marketplace.
If you find yourself running low on capital investments without the profit to sustain you, your business could be at a high risk of failure.
It is important to be aware of the ways available to stretch out that initial money and be well versed in cash flow management if you want to give your small business the best chance at survival.
To help out, we have created a money management guide for the small business owner who is worried they might be running out of money and those who are wondering how they will keep their business afloat.
Creating a cash reserve is something that should be done in the beginning, but after having a good idea of what your monthly expenses will be. Being proactive about creating a cash cushion can be a life raft when your company hits hard times.
The only downside to doing this is that it means you might be trading new clients or current growth for future safety, but if you are not the best at handling cash, this might be a smart gamble to make.
Know Your Account
First and foremost, it is always important to be fully aware of how much cash you have in your account.
Know how much you are spending, know the inflow and outflow of your account, and never assume you have money if it is not there.
Financing Your Expenses
Many companies run into issues with clients paying slowly or large purchase orders. All these things contribute to your cash flow running low.
If your clients are taking their time with payments, you can add incentives for them to pay earlier, such as a discount to the price.
Filling a large order can cause similar issues with slow payment and your company might benefit from using purchase order financing. These companies pay the supplier directly so they have enough cash to fill the order.
Cut Back and Stay Alive
If your company is really in trouble, then it might be time to make some cutbacks on employees and benefits while you refine the business model and assess what has happened as well as how you can improve in the future.
Simplify your business and stop spending as much as possible to allow the cash to build back up.
Working Capital Funding
Using a working capital funding can help you to expand your business without hurting your current cash flow. These loans can also be helpful in making equipment purchases, giving you a chance to buy more inventory for your business, and pay for the inventory over time.This type of funding is available within 3-5 business days and requires a very small amount of documentation. Typically a business can get 75% to 125% of what they deposit in their business checking account per month. All with as little as an application, bank statements, ID, deposit information and proof of business ownership.
Cash Flow Management
Starting a new business can be risky and full of failures, especially in the first few years of building it up. Cash flow management is an important skill for any business venture and can make or break your company.
The most important thing for an entrepreneur or business owner to remember is to be fully aware of your monthly expenses and how much cash you have at all times, that way you are not surprised.
Combining a high level of personalized service with a cutting-edge lending platform, Formula Funding delivers an unparalleled banking alternative. We offer a fast and efficient option to get your business the critical funding it needs without the red tape. We work with all credit grades, tax liens, judgments, and charge-offs – something unheard of at a traditional bank. Since 2010 over 15,000 small business owners have used our funding sources to grow and expand.