Writer Napoleon Hill said “Every adversity, every failure, every heartache carries with it the seed of an equal or greater benefit.” In other words, even if your business is struggling right now, there are lessons to be learned. For example, when you are having cash flow issues, you need to understand the benefits of opening a business line of credit.
Having the right information is useless unless you also know how to use it correctly. Before you open a business line of credit (LOC), it’s important to understand its benefits to ensure you take maximum advantage of this vital business tool.
Benefit no. 1: A business line of credit is there to help your business in case of emergencies or when opportunities come your way.
It should only be used for short term business financing situations. In other words, you should use it only for something that can be paid back within a year. This is not because it is expensive but because a line is designed to address short term needs.
Most banks will have a clause requiring you to bring the balance down to zero for at least 30 days a year. Financing Solutions (www.financingsolutionsnow.com) doesn’t require that in our business line of credit.
Benefit no. 2: A business line of credit is an ideal backup plan.
Some business owners say they will be too tempted to use their line for every little thing and that is why they don’t get one in place. Sure, this could lead to poor decision making and avoiding underlying cash flow problems if you are not careful. However, the most successful businesses always have a backup plan and a LOC is the best backup plan.
From our experience the time to set up a LOC is when you don’t need it. Unfortunately, most small business owners try to set up their line only when they are in financial trouble. This leads to undue stress and costs. It also steals your focus away from growing your business.
Benefit no. 3: Having a LOC can help your business survive the rough times.
At Financing Solutions, approximately 90 percent of the businesses we give lines to use them immediately. This is typically for an emergency or to make payroll. After they use the business line of credit and pay it off, the owners always comment on how glad they were to have it and that they are happy it will be in place for future problems.
When the economy is good businesses often use their LOC to help their business grow. On the other hand, it is even more critical when there is a recession. Your business will come out at the end stronger and better able to really capitalize on the disorganization of competitors who didn’t prepare with an LOC.
During an initial recession clients often delay paying their bills. This can causes cash flow problems for your business because you still have to make payroll, purchase supplies and pay bills.
Benefit no. 4: Most lines cost very little to set up and to keep in place.
There is no down side to getting a LOC in place even if you never use it. It costs nothing until you actually withdraw funds from it. Also, unlike seeking outside investors, getting a line of credit does not require you to give up any part of your business.
Benefit no. 5: More control of your money.
An unsecured line of credit from Financing Solutions keeps you in control of your cash and how it gets spent. In comparison, when you get fast business funding from a bank, they dictate how your money can be used. For instance, if your application states the money will be used for capital improvements, you can’t use it for paying business taxes.
Benefit no. 6: Peace of mind.
No matter what the circumstances, whether a boon or a recession, there is no doubt that the number one tool to have in your arsenal is reserve capital. Without it, you risk running out of cash. Even worse, you may have to pull funds from other areas of your business to cover shortcomings or unexpected expenses. Anyone who has been in business long enough knows that there are ups and downs in business. A LOC evens out cash flow so that you can ride these waves with less difficulty.
There is also a psychological aspect to having a LOC for the business owners. Owners have enough problems to keep them up at night, such as personnel issues and achieving a harmonious work-life balance. When you have a business line of credit, you know you can rest easy because you will be able to weather any storm.
Why You Must Always Keep an Open Mind in Your Business
You never know what the future will hold. When you were a little kid, it’s likely that you didn’t know you wanted to be an entrepreneur when you grew up, but look at you now. Career paths often take numerous twists and turns before reaching their destination. The same is true for the road to business success. Don’t reject any opportunity because you don’t know where your next big break or customer will come from.
Sometimes you will need to make adjustments. Getting too comfortable with the status quo is never good. This often leads to the creation of bureaucratic red tape that limits feedback and ignores opposing viewpoints. However, business is fluid and you have to stay flexible to meet the ever-changing, increasingly demanding needs of your customers. The economy, business laws, and the lifestyles of your customers will change many times over the lifetime of your company. Any business that can’t keep up will eventually fall victim to the competition.
Biases, intolerances, and miscommunication can occur when you are close minded. These aspects are never good for any business. They can also lead to the kind of mistakes that will affect your bottom line. When people work well together, it promotes creativity and the free exchange of good ideas. It also encourages teamwork and productivity. In addition, it’s beneficial for your organization as you compete in a global society.
New technology and concepts demand it. When you make up your mind before hearing all sides or surround yourself with only like-minded people, you miss out on new thinking and different ways you may improve your business.
You can enhance your decision making processes. Seeing all angles of an issue will help you make smarter choices. Also, you will be more likely to make fair and objective decisions instead of those based only on limited information. This is because you will have several options to choose from rather than simply settling for the first or easiest answer.
Benefits of Starting a Business Dashboard
A business dashboard is a tool for information management. It allows you to track key data and performance indicators relevant to growth, such as the cost of customer acquisition, time management issues and cash flow projections.
It is similar to the dashboard of your car in that it gives you a quick summary of what’s going on under the hood. As a small business owner, having a business dashboard can give you a bird’s eye view of several factors at once, like financial performance, departmental overviews and your sales operation. These can be either operational, to meet short term goals, or analytical for long term strategies and more in-depth insights.
Advantage no. 1: Decreased Anxiety
When there is a problem in your organization, the source is not always immediately clear. This may lead you to run around aimlessly trying to locate the true origin of the issue. With a business dashboard, you will have a better idea of where to start.
Advantage no. 2: Better Efficiency
With a business dashboard, you can design it to see everything. For instance, you can use it to discover how long it takes staff to answer calls or how many hours are spent creating reports. When your staff can see their job broken down into numbers and how that affects everyone’s bottom line, they will naturally want to increase productivity.
Advantage no. 3: Improved performance
To improve anything, you must be watch and then measure it. You have to examine, assess and enhance everything of significance for your business. Knowing where you can do better is the first step to understanding which areas require more of your focus. When you grasp this, your profits will climb.
Advantage no. 3: Tracking cash flow
If you are making sales, you may think you are making money but this is not always the case. Factors such as keeping too much inventory or paying too much interest on business cash advances and loans can significantly reduce your cash on hand. This means that when issues arise for which you need cash, you won’t have it. Having a business dashboard will allow you to see exactly where your cash is going and how you can keep more of it in your pocket.
Contacting Financing Solutions is another way to deal with uneven cash flow. The financial health of your business may depend on it.
