As a business owner, a cash crunch is bound to be stressful, but it’s important to remember that you have options. With the right strategy, you can address cash flow concerns before they spell major trouble for your business.
Here are six tips to help stay the course during trying times:
1. Reduce Non-Essential Costs. One of the best ways to improve your cash flow is to stop as much money as you can from leaving your business. If you have costs that aren't essential to the survival of your business, it's time to cut them out or reduce them as much as possible. By cutting out non-vital costs you can free up the funds you need to help to stabilize your business.
2. Think Creatively. Don't just wait around for business to pick up, or for support to fall into your lap. The truth is that you may need to “think outside the box” in order to keep your business afloat. Experiencing low cash flow isn't fun, especially for a business that's operating on a relatively small budget. But the sooner you make some adjustments, the better off you'll be. Whether that means offering new services or products, expanding your online presence, or cutting back on existing offerings, getting creative can help position your business for future success.
3. Look Into Asset-Based Lending. With a lack of cash flow, it can be very difficult to secure financing. If you’re in a position where you desperately need financing for your business but don’t have the cash flow necessary to secure a traditional business loan, you might consider putting up some of your business assets as collateral. These assets can include inventory, equipment, or property owned by your business. By offering up collateral for your loan, you'll be more likely to get the help you need to fill in the gaps until your business is operating at a more stable level.
4. Take Advantage of Tax Credit Programs. A professional business accountant might seem like a frivolous expense when you’re facing cash flow issues, but they could potentially help you save some big bucks. Hiring an expert to help ensure you’re getting every tax advantage available can be very beneficial to your business. Just be sure to properly vet a business accountant before hiring them.
5. Look Into Emergency Funding and Disaster Loans. In some cases, the SBA and other agencies offer disaster loans and emergency funding options. Economic Injury Disaster Loans from the SBA are a potential option for small businesses who have been impacted by events such as local storms and flooding or the recent Washington Bridge failure in Rhode Island. The Disaster Declaration Search can help you determine if you are eligible for a disaster loan based on your location and event. Debt relief loans are another option as well as grant funding. If you cast a wide net with your applications, you'll have a better chance at securing the funds you need to get your business through tough times.
6. Maintain Good Relationships With Lenders. If you can't make a loan payment on time, make sure you contact your lender before the due date. Explain your situation and ask about any deferment options that may be available to you. The last thing you want to do is default on your existing debt obligations without first trying to work out a repayment plan.
If you are a business owner in Massachusetts or Rhode Island and are looking for cash management solutions, BankFive can help. Start a conversation with our dedicated business banking team to assess your options. Increased efficiency for your business has a direct impact on your bottom line!