The beginning of a new year is typically when most small business owners look back over the past year and start thinking of ways to improve and grow their business. You have fresh ideas, start developing new goals and begin to plan for the upcoming year with a renewed passion and exuberance for your business and the future.
Most entrepreneurs at one time or another have put together a business plan, which probably has not been looked at for quite some time. Now is the time to dig out that business plan, dust it off and update it with your new ideas and goals -- or maybe you want to start fresh and develop an entirely new business plan.
Once you have your business plan updated with your current goals and marketing strategies, it is time to put together a set of financial projections. Your financial projections should be a realistic presentation of your financial situation and used throughout the year to monitor your financial performance. Since implementing new services or product development requires additional cash flow, now is also the time of year to make sure you have adequate business funding.
Three Reasons To Have Reliable Business Funding
Improve Cash Flow
Every business needs sufficient working capital in order to meet daily operating expenses. Increase your working capital by reducing expenses, focusing on strong accounts receivables management and increasing sales. Have financing in place to help meet daily operational expenses during periods of tight cash flow.
If your new business goals include hiring additional staff, purchasing new equipment or increasing inventory, business funding is an absolute must to cover these expenses. During periods of growth, there is a period of time before your cash inflow is sufficient to cover cash outflows.
Focus On Your Business
Of course, the number one reason to get business funding in place is to allow you to focus on the growth of your business. The last thing you want is to worry about how you are going to pay employees and other operational expenses.
Business Funding Options
There are a variety of ways for small businesses to obtain financing, but the trick is to find financing that fits your business and provides the funding necessary to meet your growth goals.
Traditional Bank Loan
Banks offer you loans or lines of credit needed to support your business. However, traditional bank loans are difficult to obtain, as the bank looks very closely at your current cash flow situation, collateral and liquidity of your assets. Your personal credit is also a factor in whether or not your business is approved for a bank loan.
If you are unable to obtain a bank loan due to lack of satisfactory financial performance or poor personal credit, you may be able to get equity financing from a private investor, angel investors or venture capitalists. This type of funding is quick and convenient; however, as the name indicates, you give up equity in your company and the funds may be limited to a one-time source of funding.
Cash Flow Financing
If you don’t want to give up equity in your company, but still want quick and flexible financing, then consider cash flow financing. One form of cash flow financing is factoring, which is one of the most flexible forms of business funding and ideal for small and medium-sized businesses.
The factoring company, or factor, purchases up to 90% of the dollar amount of your company’s accounts receivables. After the customer pays the invoice to the factor, the remaining funds are sent back to you less any applicable fees. Factoring is fast -- approvals typically take less than two days. Factoring is flexible -- you use it when you need it and factoring helps the management of your accounts receivable.
Now is the time to tap into your creative side and put your plans into action. With a well-thought-out strategy and reliable business funding in place, make 2013 the year to achieve your new business goals.
If you need reliable business funding but are still a little skeptical about factoring, download our FREE Tip Sheet Online Factoring: Myths vs. Facts, which addresses many of the myths in factoring advertising and how to best prepare to search for a factoring company.
Ready to take charge of your cash flow today? Call 888.833.2286 to speak with a Cash Flow Consultant.