As a small business owner, you need an adequate amount of working capital to grow your business. Without liquid cash, your business has a very limited ability to grow and a huge potential for failure. It is your responsibility to develop both long and short-term strategies for accessing the working capital your business needs to succeed. This includes having your finger on the pulse of your cash flow, your overhead and your revolving debt. This is especially true if you are using borrowed capital like unsecured business loans to cover your operating costs. Stretching every dollar you spend should always be a top priority, especially if you are paying interest on it.
Having a long-term vision of what you want to achieve is part of preparing both you and your business for future success. For instance, if you require extra capital to cover a short-term expense like payroll, inventory, repairs, or even a sale or promotion, it is essential to be able to anticipate the need well before it becomes a critical situation. Anticipating problems before they arise is a huge advantage in any situation, but especially when it comes to operating a successful business. While it may be hard to imagine every possible contingency, it is still better to have a plan in placed not have to use it than be blindsided. Here are some common capital expenses to watch out for.
What Are Your Potential Business Needs?
Make it a habit to plot out and categorize all your potential business needs up to six months in advance. This will ensure that you always have plenty of time to prepare for upcoming expenses, whether they are short-term or long-term.
How Much Capital You Will Require?
Determine how much money you require for your business needs. Do you have the capital available to cover the costs of operating your business from month to month? Some businesses are seasonal, and being prepared to navigate the slow times is critical.
Will You Need to Borrow Money?
Just about every business borrows money in one way or another. Sometimes it is more literal, like with a small business loan or a merchant cash advance, and other times it could be by financing a vehicle or piece of equipment or accepting stock or merchandise on a net-30 invoice. All of these scenarios require good credit, so keeping yours in good shape is essential.
Is Your Personal Credit Score In Good Standing?
So how do know if your personal credit score is in good shape? Everyone is entitled to a free comprehensive credit report from Equifax, Experian and TransUnion once a year, either online or by mail. You can also monitor your credit and get daily reports with free services like Credit Karma.
How is Your Business Credit Profile Looking?
Just like your credit score, it is equally important to have a solid business credit profile when you own a business. This means obtaining an EIN (Federal Tax Identification Number), maintaining an online presence, paying your bills on time, maintaining good relationships with vendors and suppliers, and having a business credit card account in good standing
What Borrowing Options Are Out There?
Don’t be scared to try something new. Researching alternative ways to find the capital your business needs can be crucial to its success. There are many borrowing methods that you can look into. Take the time to do your research, and keep an open mind. A willingness to take risks is the path to success
How Can You Prepare Your Business?
Consider all the same challenges when you are developing a long-term plan for your business. Of course, anticipating long-term needs is quite different than meeting them in the short-term, but both require a certain element planning and strategy. Long-term needs will most often require more money for large purchases like essential equipment, expanding or opening a new location, renovations and just about any other financial need associated with your business. Put in the effort, because the only place success comes before work is in the dictionary.