Every year several small businesses shut down their operations or go bankrupt either due to lack of customers or because of limited or poor cash flow. One of the main reasons behind the failure of startups and small businesses lies in the fact that such businesses tend to overestimate future sales and are not able to regulate the incoming and outgoing cash.
Therefore, to tackle this imminent danger, entrepreneurs must avoid making these common mistakes that most of the business holders do.
At the initial stages, most of the owners get overly optimistic about their future business sales and tend to do spending without any prior planning. And also, ignoring delays that are happening in payments and services, not making any budget and cash-flow plan, and finally, having no Plan-B in hand.
To avoid such an ebb, one should consider conducting a thorough business planning and should discuss several funding options. For example, if you apply for an MCA, then you should use the merchant cash advance calculator to get the estimate and do prior planning.
Payment collection is an art, as they say. And if you are not a good artist, then you must try to build a professional atmosphere that can facilitate the cash flow positively. No matter how excellent your services are, the client is not going to come and give you a payment in your hand. Therefore, it is necessary to secure the future of your business by asking for a certain percentage in advance.
As business runs in a cycle and gets easily disturbed and if it’s only producing and not being filled regularly. Therefore, one needs to understand that by disturbing incoming and outgoing cash flow, you are damaging the very basis of the business. And in a short time, you will not be able to hold a grip on your business anymore. Therefore, it is advised to get the cash upfront and regulate the cash flow by managing the input and output of payments.
Therefore, if you are at the beginning phase of your startup and are trying to manage the business, then we have great news for you. The following are the things you must inculcate in your business plan so you can avoid failure. Now get your startup into positive cash flow land and enjoy the turnout grandly.
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1. 5 Solutions To Optimise Your Cash Flow
Following are the quick and easy options to get your startups and small businesses financed:
a) Opt For Express Bank Loan:
Express bank loans are a medium-term financing facility that is offered by traditional banking institutions. For this kind of loan, you need to follow the monthly payment system and must accept expensive interest rates. However, express bank loans are a short-term bank loan but require you to follow a detailed application procedure and are not readily available to everyone out there.
Therefore, if you have encountered a disastrous situation, then getting a disaster, a short-term loan is a more realistic option.
However, if you need the banks to finance your business, then you should maintain a good portfolio and get a better credit rating to be qualified. Also, you can decide the loan value and repayment method according to your feasibility.
b) Make Sure To Offer Multiple Financial Payment Methods
Investment is the most crucial part of running any business. However, the regulation and management of the investment, especially at the initial phase of your business, are even more necessary.
Therefore, you need to ensure a seamless payment process by adopting a specific financial method. Financial solutions POS (Point of Sale Finance), credit card, cash loans, etc. But make sure first to check the credit card credibility of all your clients and customers so you can get paid on time.
c) Take Advantage Of Personal Installment Loans
If you are in a hurry and need the money fast, then getting a personal loan could be a good option. Because first, it does not take too much time and issue you the amount in 2-3 days, and secondly, it involves a straightforward application process. The lender is only concerned about the current credit score and cash in your account.
d) Try To Get A Short-term Loan On Easy Conditions
Loan applications are indeed hard to process and make you go mad by signing and checking multiple places. It includes a lengthy application procedure and demands you to prove the credibility and validity of your request at each level. And upon making any little mistake, the whole system gets in vain.
fBut all loan applications do not require the traditional method. Such as short-term loans that can fulfill the need and are very easy to process. These short-term loans are useful because they do not charge any interest and take only a year to be completed. The application process is also not very tiring, and you get the money in your account within 24-72 hours.
e) Go For Merchant Cash Advance (MCA)
Merchant Cash Advance (MCA) comes under the umbrella of short-term loans, but it is not considered as a debt. It sounds a little confusing, but not that complicated. With MCA, you are making a purchase based on your future credit or debit card income. It is highly recommended because the procedure does not involve a great application to be filled and hefty fees to be applied. You can calculate the loan by this simple formula.
All you need is to check the total amount you have taken and the percentage of the full borrowed money. Like if you have received $5,000, then you need to multiply this amount with the percentage of this money that is 20% to get the total answer. Moreover, you can receive the payment in just two to three days.
Merchant Cash Advance or MCA collects the payment by transacting a certain percentage from your credit or debit card sales and collect the whole borrowed money without charging any extra fees. There are several options when it comes to MCA, but the most regarded ones are named Lendio, Ondeck, Loan Builder, and Credibly.
If No matter how good for your business idea is, how detailed planning you have done, and how much physical labor you are investing in, a business cannot become a threat proof at all. Any international recession or personal accidental problem can become a hurdle and may affect business performance in a significant way.
Therefore, the immediate need of such kind has made way for several financial assistance methods that help in getting through a tough time. Apart from cash flow management and regulation, insurance policy is also a must. So, you can tackle the accidental mishaps.
However, when one needs immediate cash flow, these invoice factoring, business credit cards, traditional installment loans, bridge loans, online credit lines, and short-term business loans are some of the most favored available options.