Running a small business should be about having fun. A key part of this is learning how to juggle. More than just multitasking, you need to take understand your customers and your suppliers and you need to find ways to leverage those relationships for everyone’s benefit.
A key part of this is financing your business. Think of the cash flowing through your business as the lifeblood which keeps your baby alive. Without it, you would not be able to pay bills, hire new staff, or even buy the raw materials you need for your products. It does not matter if you are running a bakery or a surf shop. You need money to keep everything running smoothly.
Even if you were not a finance major at college there are a few simple finance hacks that every small business owner should know. These will help to better manage your business and focus on what is really important – keeping your customers coming back.
This might not seem like a financing hack, but it is actually an extremely power tactic. By bringing on contractors for targeted tasks you are able to level the combined knowledge and experience of experts in certain fields without the costs of having full-time employees. These short-term work arrangements can be especially helpful when you are just starting your business or when you are undertaking a new project.
Invoice as if Your Life Depends on It
Well, it does. If you don’t invoice correctly and in a timely manner you will never get paid. I realize that invoicing can be a chore, but it is one that should never be procrastinated. Making the sale is only half the challenge. So proper invoicing helps you to get paid. This also means you can pay your bills on time.
Another advantage of invoicing as is your life depends on it is that your customers will come to understand and appreciate how you work. They will know that if they chose to purchase your product or service that they will have to pay for it on time. In the end, this will give you customers you can count on and will give you a cash flow cycle with is more dependable.
Banks are not the Answer
Fifty years ago, if you needed money for your small business there is only one choice – your local bank. But times have changed. Banks are no longer local and it is hard to develop a relationship with someone at your local branch when they are not really interested in your business. As such, you need to develop a list of reliable lenders who understand the needs of small businesses. There myriad number of options for lenders that specialize in growth business lending.
These lenders know that you don’t have time for filling out forms in triplicate. They know that what you need are straight answers which can help you solve liquidity challenges today. These programs can include purchase order financing, equipment financing, and even merchant advances. This is when you get a loan or a line based on future credit card sales.
Simply put, banks lack the flexibility to offer these programs to all but their largest customers. By large, I don’t mean a $5 million or $10 million company. I mean companies with revenues well over $100 million. Times change and if you want to hack how to finance your small business you need to change as well.
An Ounce of Prevention is Worth a Pound of Cure
You probably heard this from your mother when you were growing up. And you might be wondering how this applies to managing the finances of your small business. It comes down to your ability to be proactive. If you know your business is highly seasonal, then you know that you will need to plan your finances accordingly. Furthermore, you know when your most important machine is on its last legs. Don’t wait until it dies to get a new one, plan ahead and be prepared.
A big part of this approach should be a having a financial plan for your business. This will help you to know how much money you need to cover expenses – daily and unexpected. A financial plan will also help you prepare for your upcoming sales as you will surely need inventory or other resources to make the products your customers are clamoring for.