Today, 29% of small businesses fail due to a lack of capital. Essentially, they ran out of cash. As a small business owner, you need an awareness of your cash flow to avoid losing your business because you are out of necessary operating cash.
Is your business riding the line? Could one late invoice payment put your business at risk? To keep your cash flow even and make sure that you have the right amount of reserves to deal with the lean periods. If you are located in San Diego, then you understand the importance of being flexible to meet increasing demand or to deal with market changes.
Working capital loans in San Diego can be obtained through a variety of financing options, including small business loans. Both of these options can be used to help fund operations during lean periods, as well as being able to balance your cash flow from month to month. Here are a few of the reasons that your small business may need to consider a working capital loan.
Too Much Start Up Spending
When you are just starting out, it can be easy to go overboard, spending more than you need to. Money can be wasted in new businesses because they are not paying attention to the cost of expenses in relation to their product pricing. Therefore, it is important that you are doing the math to back up what you spend by what you are earning.
Make a budget for all aspects of your business, including advertising and inventory. Do not overextend yourself. Know what you can commit to what you can invest and stick to it.
No Cash Flow Budget
No matter how long you have been in business, it is critical to track your earnings in comparison to your expenditures. By keeping accurate records, you can plan for potential shortfalls and make adjustments accordingly. You will also be able to strategize in a way that benefits your company as it grows.
Another aspect of cash flow issues can stem from slow collections of your accounts receivables. When clients do not pay on time, it can put you into a cash flow crunch because you still have expenses that need to be paid.
Overestimating Future Growth
Owning a business means looking for ways to grow your business and increase its profitability. However, many business owners look to grow before they are ready. Others tend to overestimate the growth potential of their business, so they spend without preparing for the fact that the boom may not come.
Before you make any moves to purchase new equipment or to expand your workforce, it is important to analyze the data and stay loyal to your calculations regarding growth.
The solution to dealing with these issues could be a working capital loan for small businesses. You can address areas of growth effectively, while providing capital to handle overhead expenses while you wait for payment. Some working capital loans can even be made based on your outstanding invoices. If you are looking for working capital loan options, then click here to learn more about what your business qualifies for.
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.