No matter how well you run your small business, financial setbacks are inescapable. Being a small business owner, you have to deal with numerous challenges including proper cash flow management. Generally, these small-scale businesses do not acquire sufficient funds to handle unforeseen situations and economic downturns. Scroll down to know some of the steps that you can take to get through the lean financial times in your business throughout the Year 2019.
Recognize the Cash-Bleeding Areas
Cash is said to be the lifeblood of any organization. The first step you should take in controlling the financial pressure is to recognize the cash-bleeding areas within your business. This way, you can liquidate the products that are giving zero or extremely low returns. You can easily spot those areas by having a detailed analysis of your financial statements.
Modify Your Payment System
Although debit and credit cards have simplified the life of a common man, it’s astonishing to see that most small business owners still hesitate to collect payment through these channels. Keep in mind, customers always look for hassle-free payment procedures. One of the ways to bring your declining business on track is to facilitate your buyers by adding debit/credit card options into your system.
Discuss With Your Adviser
Since financial advisers can precisely assess your financial statements, they can help you identify the areas that can stabilize your cash flows. You may also consult your financial institution for this as they have personnel who can review your statements at no cost.
If your business is undergoing a temporary crisis, you may opt for short-term funding sources to back your operations. Entrepreneurs constantly look for different business financing options to expand their existing operations or to reduce their current business losses.
In the first place, you should get in touch with your bank to get assistance. However, if you’re not successful in borrowing loan from your bank, you may consult a professional lender who deals in business financing. But again, it’s still not very easy to acquire loan from these funding solutions.
How to Get Your Business Loan Approved?
Acquiring a small business loan can be daunting. However, getting your ducks in a row can help you obtain your desired financing without much effort.
Make Sure You Have All Necessary Documents Ready
According to Entrepreneur.com, “Banks are in the money-lending business. To lend money, they need evidence of security and stability. It’s that simple.”
Thus, before you plan to forward your loan application to the lender, just be sure that you have all important documents handy and organized. One of the biggest reasons why loans get refused is the absence of accuracy in the provided documents. The whole process will be smooth and painless if you take time to accurately maintain your accounting and taxation data. Be very sure to set up a foolproof system in line to keep everything systematized.
Increase Your Credibility
Besides having all your paperwork in order, it’s also important that you maintain good credibility. Make sure to always pay your bills on time and avoid delayed payments at any cost. In addition to that, you should also opt for a single application at a time.
Know your Requirements
There are different types of loans available and it’s important that you know the type that can work best for you. For instance, if you’re applying for an SBA loan, you have to make sure that you have included all the important documents. Plus, such loans take around 60-90 days to process.
Make a Solid Business Plan
A well-made and highly vetted business plan is a MUST. To make your business prosper and succeed in the long-run, make sure to create a plan accordingly. According to the SBA, your business plan should involve a comprehensive executive summary, a detailed description, organizational structure, sales/marketing summary, loan requirements and future financial forecasts.
Show Adequate Cash Flows
Your bank would be highly interested in your current cash flow situation. To get your loan application approved, you should demonstrate your lender that you hold adequate funds to meet your monthly expenses including salaries, utility bills, etc. Besides exhibiting enough cash balance, you may also need to present your previous tax returns and debt situation to your financer. Thus, you should submit a plan that demonstrates your monthly repayment capacity.
Being a small business owner, you may need to face innumerable hurdles and challenges. Acquiring finances is definitely one of those obstacles. However, with proper planning and management, you can easily overcome this barrier and can achieve long-run business growth and success in the Year 2019.