How to Finance Growth
There are several ways to finance growth for a small business. You just have to
know what your options are and to make the best choice for your growing small business.
It is a great feeling when your small business becomes financially independent and you are able to use it to support yourself, family and even have employees on the payroll. Nevertheless, it is important to not become complacent with your success because there are huge ups and downs in running a business. You already know it takes capital to do this but you may need a bit of research and experimentation to determine how you should go about financing your growth. Forecasting and planning are critical to you really reducing your costs for borrowing money.
The Importance of Cash
The life of a small business typically consists of merchandise and services going out with account receivables coming in. However, there is a lot of overlap and gaps in this process, making it sometimes difficult to know whether you are really seeing a profit. You go through the days paying your bills and satisfying customers and in the end, you hope to have money to pay your bills and employees with money left over for yourself.
If your small business operates this way, as most do, it could only take one
emergency or unexpected expense to send you into a downward spiral of debt.
Before you know it, you are unable to make payroll, pay taxes, or expand your
Financial experts agree that all businesses, big and small, should have a business line of credit or working capital to handle these types of emergencies. In spite of this, many small business owners are so busy making their business work that they don’t have time to see the big picture or look too far into the future. You will most likely need a healthy level of cash to finance growth and ensure that you are not draining your existing business in order to expand.
Take a Good, Realistic Look at Your Business to Find Ways to Build Capital
Just because you are growing revenue (sales), doesn’t always mean that you
are going forward. In order to grow your business, you cannot go sideways or
backwards. You have to turn a profit, gain customers and improve what you are doing, all at the same time. By turning a profit, it can’t just mean on paper but also by putting more cash into your bank account. Often, businesses think that just because their income statement says they have a profit that they are doing well. That income statement might be on an accrual bases verses a cash bases so you should always run two types of income statement. The cash bases income statement will tell you if you are billing cash in your business.
It is worth the time and effort to examine everything about your business. Check whether you are spending too much in any one area, such as payroll or surplus supplies. Look at what you are doing right and capitalize on that, while being realistic about what may not be working and getting rid of it. It is worth being conservative when it comes to expenses.
In addition, focus on the task at hand. If your goal is to finance growth, you have to keep from being sidetracked by things that do not support that mission. In other words you might need to pass on opportunities that require you to spend money rather than make it. The biggest mistakes small businesses make is they try to be everything to everyone.
Get a Cash Advance to Finance Growth
Okay, so the cash in your bank account is either depleted or already budgeted for other items. That doesn’t mean you are stuck where you are and unable to grow and expand. There is another option called a cash advance company, like Financing Solutions (www.fundmypayroll.com).
By using a cash advance company, you can get the cash you need to finance growth without raiding other areas of your business. The process is simple. You can sell your account receivables, get cash based on their worth and not have to wait the 60 or 90 days for them to become due. A cash advance company is a great short term solution to help you get the needed cash you need.
The funds are paid to you in a lump sum, allowing you to use the money to
immediately hire staff, take advantage of a new opportunity, or whatever else you need to grow your business. You can then pay it back quickly, often in a few weeks or months.
Perhaps the greatest aspect about cash advances is that you don’t have to go to a traditional bank where they require tons of collateral, lengthy applications and a long-term commitment. Most small businesses cannot qualify for a traditional bank loan for these reasons. Cash advance provides the best way to get the fast cash you need to finance growth while still managing your daily operations.