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A Stress-Free Guide to Finding More Cash

By: SmallBizClub

 

Stress Free Guide to Finding More Cash

There is a saying in business: “Revenue is vanity, cash flow is sanity, but cash is king.” While it might look impressive to have a veritable flood of revenue from sales, a truly healthy business thrives on the inflow and outflow of cash. Earning money and sitting on it does not make a business more profitable; rather, a business should be spending the money it earns to increase its earning potential.

Unfortunately, many new business owners fail to comprehend the importance of flow, and after a few short months of operations, they are scrambling to find cash to improve their businesses. If you have found your business to be lacking sufficient cash, don’t panic! Here is a simple five-step guide to help you find more money for your business and repair your disrupted flow.

Step 1: Stay Calm

Business is best conducted with a level head. Believing that your situation is hopeless will only cause you more stress and make it more difficult to figure out a solution. Before your emotions get the best of you, you should try to use logic to understand and organize your situation. If you feel too anxious to make calm, sensible decisions, you should take an afternoon off to collect yourself. Then, you must remain composed throughout the remaining four steps of curing your cash flow problems, striving to feel realistic and optimistic rather than destructively negative.

Step 2: Assess the Cause

It is entirely possible that your cash flow problem is not something that can be easily rectified. There are plenty of reasons you might be currently strapped for cash, and many of them are significant hints that you should abandon your business plan.

For example, perhaps you lack the business expertise to lead your startup to success. This guide is no substitute for formal education or experience, and it cannot teach you how to sustain appropriate cash flow in perpetuity. Sometimes, it is less risky to close your doors when you run out of money than to continue spending money on a foregone conclusion.

Conversely, if your wallet is empty because your business has fallen victim to some unforeseen obstacle, you may still have a chance given sufficient funds. As long as you recognize your mistake and are prepared to budget for it in the future, you may be able to use some fast cash to recover your flow completely.

Step 3: Find a Short-Term Solution

Ultimately, your goal should be to prevent this frantic search for cash in the future, but right now, you need money fast. Fortunately, there are a few different avenues you can take to get the money you need.

  • Traditional loans. Business loans or lines of credit usually have low interest and long payback periods, allowing you to rebuild your cash flow without an immediate worry of paying off your debt, but securing them can take time.
  • Invoice factoring. Though factoring companies will take a portion of your pay, it might be worth getting your hands on the majority of your well-earned money much faster than waiting around for delinquent clients. You can learn more about invoice factoring by doing research on the internet, such as this article by BlueVine, and asking the company about anything you’re unsure of. Sometimes your primary cash flow issue might be slow-paying clients, which is when this option is most attractive. Free up capital quickly and put it to use where it’s needed most.
  • Venture capitalists and angel investors. VCs and investors love giving out money, and if your business is promising, you can earn thousands (even millions) of dollars in an afternoon. However, they won’t invest if they catch a whiff of your unhealthy flow and not all will quickly part with their money.
  • Family and friends. Many business owners use this option as a last resort, but family and friends provide both financial and social support. However, when you take money from loved ones, you must be certain that you will be able to pay them back―or else you risk ruining the relationship.

Step 4: Learn From Your Mistakes

Once you have the cash, you can get your flow back. However, it is important to remember that cash flow problems could actually just be symptoms of larger issues, and unless you diagnose and treat your business, it will fall ill again soon. You should thoroughly investigate your business for potential causes of cash flow issues, such as poor pricing or poor marketing. Then, you must develop a plan that will put right any underlying problems and ensure the safety and security of your flow forevermore.

Step 5: Execute Your Long-Term Plan

Not every business owner’s goal is to have a self-sustaining company that endures the ages. In fact, your business goals may be to sell your startup to a larger corporation. Still, healthy cash flow is essential to a functioning business, so maintaining your flow despite various obstacles will make your business more desirable to potential buyers. Before you make any business decision, you should consider its impact on your cash flow. Then, your long-term plans will be sure to succeed.

Cher ZevalaAuthor: Cher Zavala is a content co-ordinator at http://www.seekvisibility.com/, assisting in contributing quality articles on various topics. In her free time she also enjoys hiking, traveling and getting to know the world around her. Cher has built up many strong relationships over the years within the blogging community and loves sharing her useful tips with others.

Published: May 16, 2016
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