What to do when your business needs cash flow
As a small business owner, you’re under a lot of pressure to constantly deliver new sources of cash to your company. Without a regular and ongoing amount of income padding your bottom line, you won’t have the money you need to pay yourself, your employers, or your suppliers. Unfortunately, it’s impossible to predict how your organization will operate from one month to the next. Just because you’re doing well at the beginning of the year doesn’t mean that you’ll be earning the same amount of profit by the time you reach the third quarter. Every small business face problems with money from time to time. The important thing to remember is that you can survive – you just need the right plan of action in place.
Be prepared for the downturns
The first thing you can do to prepare yourself for financial issues in your business, is make sure that you always have an emergency fund ready. Although it can take a while to build this safety net, it’s an essential tool that can help to keep the lights on when the going gets tough. Whenever you earn a little extra money in your business beyond the profit you need to pay for all of your everyday expenses, don’t give yourself and your team a bonus. Instead, pull the extra cash together and put it away into a separate space. This will be your safety net – something you can tap into whenever your profits aren’t doing as well. Ideally, you’ll want to build up enough cash in reserve to pay for all of your business expenses for at least three months before you begin looking into bonuses.
Know where to look for alternative funding
Building up a solid cash reserve is a great strategy for the long-term. However, in the initial stages of launching your business, you may not have enough money left over after you’ve paid for all of your essentials each month to save anything. With that in mind, it’s important to know where you can turn for alternative funding if you’re stuck in a difficult position. The unfortunate truth is that it’s not as easy to get a business loan as most people think. Most banks and traditional lenders will need a lot of evidence to prove that your business is profitable before they’ll even consider giving you any cash. With that in mind, you may need to consider using personal loans instead.
If you don’t have the best credit, then you could look into taking out a short-term loan, as the best payday loan lenders will give you easy access to cash quickly, which you can pay back after you’ve boosted your profits in the next month. If you can’t get a big enough loan to handle all of the costs you need to deal with right now, then you might want to consider looking into options like crowdfunding. Lots of smaller and startup businesses have found customers and investors willing to help them launch their business using this route. However, it may only be a suitable option if you’re starting a new company.
Story by Justin Weinger