Running a business is difficult enough as it is. The market is quickly becoming more competitive due to the increasing number of small and home businesses operating today. There are more challenges to overcome and you may need to invest more time and energy in order to take your business to the success it can potentially reach.
The best way to ensure success when running a business is by covering all the basics. A good system, a strong team, and an efficient workflow can really help your business survive the toughest situations. Strong cash flow is another key element. There will be times when you can’t afford to receive the next order or pay your bills on time due to cash flow difficulties, but you now have more options to use in these circumstances.
An Emergency Fund
Just like your personal finance, a business can really benefit from having an emergency fund set aside. The emergency fund can be used to handle unexpected expenses, from the sudden plumbing repair bills that you weren’t expecting to paying suppliers before clients’ invoices clear. Of course, developing an emergency fund takes time, but it is something worth doing nonetheless.
Start by setting aside a portion of every revenue. You don’t need to set aside a lot of money to get started. A lot of businesses use the 5% rule, in which case 5% of all revenue goes towards the emergency fund. After a while, it will be easy to make a portion of the revenue part of the cost factor, so your prices will also reflect the emergency fund you are developing.
Only use the emergency fund when it is really necessary and always go the extra mile to restore the balance as soon as possible. The fund will act as a filler for when you have cash flow problems, allowing you to focus on other, more important, challenges in running your business.
Receivables Factoring
Another great way to fill gaps in your business cash flow is by taking advantage of accounts receivable financing. As the name suggests, AR financing allows you to take out an affordable loan using nothing but the accounts receivable as collateral. The financing firm will even do the hard work of collecting the receivables for you, which means you have one fewer thing to worry about.
AR financing is great for when you need to finance the next batch of production and you don’t have the money to do it. You can continue to take customers’ orders, knowing that previous invoices are there for you to use as collateral.
In a market as competitive as today, maintaining smooth operations and good cash flow is very important. AR financing can help you achieve both goals while letting you have the flexibility to continue growing the business and pursuing new opportunities. You won’t even have to worry about the application process or the commonly complicated terms associated with using long-term loans.
New, Short-Term Partners
A lot of entrepreneurs instinctively think of long-term relationships when seeking partnerships. In reality, however, there is a lot to be gained from building shorter yet stronger relationships with potential partners. Many businesses across the country are starting to do this as a way to remain competitive.
Instead of inviting new investments or seeking partners to help grow the business, you can now find partners for individual projects. Let’s say a factory near you orders 1,000 new uniforms, and you’re having trouble financing the production. You can find a partner to help finance this individual project. Profits can be shared based on a pre-determined agreement and the partnership will automatically end when the project is completed.
This type of short-term, project-based partnership is fueling small businesses and helping them branch out to bigger orders and more prominent clients. Similar to attracting investors, you too have the option to invite multiple partners into a project. The concept is very similar to crowdfunding, but you’re limiting the partnership to those with whom you already have a good relationship.
These are just some of the options that can help you take the next order without worrying about financing. With these options in hand – and when used correctly – cash flow problems can be fixed immediately and you can continue to take your business to new heights. They are also the kind of options that are always available, giving you that extra peace of mind and more energy to allocate towards running the business as best as you can.
Take the Next Order: How to Strengthen Your Business’s Cash Flow
May 9, 2017 by Team Celebration
Filed Under: BUSINESS, CAREERS, Contributors, EDUCATION, Uncategorized Tagged With: A Celebration of Women, accounts payable, accounts receivable, acelebrationofwomen.org, business cash flow, business loans, female entrepreneurs, growing your business, New, Receivables Factoring, Short-Term Partners, Take the Next Order: How to Strengthen Your Business’s Cash Flow, woman, women in business
About Team CelebrationTeam Celebration is a devoted group of women dedicated to sharing information that will better the lives of all women making this space a truly convenient Resource for Women globally. Speak Your Mind: You are invited to leave comments and questions below.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
You simply type a KEY WORD into our SEARCH BOX at TOP RIGHT of Homepage and a list of associated topic articles offering truly educational and informative features will be at your fingertips.