Small businesses use their line of credit for cash flow to run daily operations and pay vendors, suppliers, and business partners. Unfortunately, a business line of credit is hard to come by. Even if a company already has one.
Tag Archives: working capital
Have you heard about payday loans? Chances are good you’ve heard nothing good about them. They trap customers in an endless debt cycle. You wouldn’t dare, right?
Of course, you want to grow your B2B small business. That might be tricky to do if you’re like those businesses surveyed in Wasp Barcode’s State of Small Business Report. More than half of the respondents plan to invest fewer than 3 percent of their revenue on marketing. In this case, it should be no surprise why growing revenue is the No. 1 challenge for small businesses.
This is a true story. Names have been changed to protect the innocent and the guilty.
A prospect contacted me interested in my company’s services. We discussed the project and came to agreement on the scope and price.
A colleague told me about a long-time client and friend who passed away. The business went with him. It happens. That’s life. While his business made up about a third of hers, she weathered the loss of income because she had enough cash stashed away to cover her while she looked for new clients.
Another colleague texted me to let me know that her computer had died. Fortunately, she was able to buy a new computer the same day and restore her backed up files to the new computer.
Cash flow makes or breaks a small business. If you don’t have the cash to pay expenses and make payroll, then your business can’t survive. Simply put: no cash, no business. This can and does happen even if you have all the customers you want and talented employees who do their jobs well.
Your small business could have all the clients it wants and be profitable. Yet without cash-on-hand, things could fall apart in an instant. Profits don’t guarantee you’ll always have cash to pay employees, purchase supplies and take care of your vendors. The good news is that you can control your finances to ensure cash is always available. It begins with understanding how cash goes in and out of your company.
Many small businesses avoid seeking loans, but not for the reasons you think. According to a Sageworks survey, business owners opt not to pursue small business loans because they don’t want to take on debt (62 percent) or think they won’t get approved (24 percent).
Data from the Federal Deposit Insurance Corporation (FDIC) shows that small business lending — for loans less than $1 million — has dropped between 2008 and 2012. It has yet to see improvement since.