Archive for Working Capital

small-business-loan-find-needWith unemployment at an all-time high, many people find themselves out of work.  They are scrambling around trying to find odd jobs as a means to keep up with the bills.  But as unemployment is on the rise, there is a new statistic emerging from this unemployment crisis.  More people are starting their own businesses.  If you have the right marketing plan, product and services ensuring you earn profits, then now is the time to start a business.  But how do you pay for the business expenses?  Where will the money come from?  A small business loan is just one way to attain money for your start-up costs.

How a Small Business Loan Covers Start-Up Costs

When starting a business, there are many expenses to consider.  There are permits, equipment, employee salaries, vendor pay, products, shipping (if need-be) and more.  How will you cover these costs?  A small business loan is a way to ensure these expenses are covered.  It will allow your business the chance to succeed.  Without having the money ready to deal with start-up costs, it puts a stop to the momentum of your progress.  The “big idea” you had in mind for your business comes to a screeching halt.  You realize too late; there is no money to cover the expenses.  But with a small business loan, the money is available to propel you towards success.

Why a Personal Savings Account Falls Short

Having a piggy bank filled with enough money to cover initial costs is another way to provide funding for your business.  It allows you to start from a clean slate remaining debt-free.  But the problem is how many entrepreneurs actually have a savings account available to help with operating costs?  This is not reasonable for most people willing to create something from scratch.  Alternatively, if money is in savings, it is  likely designated for personal costs rather than business.  If you remove the money from savings, do you still have enough to pay for rent, food, electricity, car, medical emergencies and gas?  Withdrawing money from your personal savings account only works for those whose piggy bank is a large Swiss bank account.  Otherwise, you fall short when it comes to paying for personal and business expenses simultaneously.

To find out  how to pay for start-up costs, talk to one of our small business loan or unsecured business loan experts today.

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Small businesses these days have issues getting off the ground, due to the fact that only five percent of start-up business are able to raise sufficient capital.  Of the five percent of ideas that are stellar enough to be take off, the capitol is usually raised on investors’ terms, so as you may see, raising capital to fund your business is not an easy proposition.

Entrepreneurs

Entrepreneurs are often naïve in creating a business, and instead of convincing the bank of why they should invest; they show them how great they personally think their product or idea is. Inventors and new business owners don’t know how to go about the process, because of their lack of experience.  New business owners are often misled or misinformed because of this inexperience, and not knowing the process can cause hours of time to be wasted on a lost cause.  Being mis-informed often causes entrepreneurs to present the wrong information, and cause them to not be correctly prepared.  Movies make it look so easy, but in real life, it’s an endless and complicated process that most people aren’t able to take on, so why go down that road? Seeing as there are so many ‘tricks of the trade’ to getting a bank to believe in your ideas, why not raise capital in a way that is much easier?

Small Business Loans

For new business owners, the hardest thing to do is to find money to fund their ideas. The process of obtaining working capital, however, is necessary.  Taking out a small business loan can be an easy way to get your business up and running, and has a simple process.  A good business pitch and credit history can be all you need to get a loan to start your business. In this process, you will pay back the money you borrowed with a small cash increase (interest), in small customizable intervals, such as once a month.  So if you don’t want to have to deal with banks anymore, look into getting a business cash advance.

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If you are a small business owner facing a declining business,  there are many ways to turn it around and change the circumstances so they are in favor of your business.  The book “Corporate Recovery: Managing Companies in Distress”, but authors Slatter & Lovett, gives valuable advice on turning companies around.  Some of the steps they recommend for your small business are as follows:

1.  Get control of cash flow and short term financing with a plan for Crisis Stabilization.  Understand all of the resources you have at hand, including your small business loan and funding resources.

2.  Perform a thorough assessment and make sure your leadership team is the one that is going to get the job done for your small business.

3.  Keep the lines of communication open with stakeholders, and make sure you have their support.

4.  Focus existing resources – be willing to sell peripheral assets to generate cash.

5.  Make any structural changes needed, including laying off unneeded employees.

6.  Understand the reasons your small business got into trouble in the first place, and focus on changing those processes.  Figure out how to be efficient and lean.

7.  Restructure the business financially, if needed.  Only make commitments that you can meet.  Raise working capital, or find other sources of funding.

Cash management is also critical to turning around a failing business.  Don’t spend cash unless it leads to generating revenue directly.  Prioritize payments.  Develop plans so that suppliers who aren’t getting paid understand when they will receive payment.  Communicate constantly with your creditors.  Implement a cash-only basis with your customers.  Provide status and updates for everyone involved in your business process.

The stress on communication is critical; creditors know that if your small business ends up in bankruptcy, they will likely receive very little return on their invoice, so many will be willing to work with you AS LONG AS you keep the lines of communication open.

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