To fortify your small business’ finances while you push towards growth, you must be methodical about managing expenses, utilizing credit, and putting your earnings into fixed assets.
Pursue Strategic Financing Options
Growth phases can be difficult for small businesses because they’re disruptive and unpredictable. You have to be cautious to stick to your operating budget and avoid making excessive expenditures. Don’t assume that increasing your output is invariably going to increase your margins. Ramping up your operating capacity is going to take a lot of additional capital beyond what you’re currently working with. Furthermore, there’s no guarantee that you’ll be able to attract more customers and bring in more revenue as you upsize.
Seeking a small business loan that carries a manageable interest rate could be a good way to get through growing pains. Bear in mind, however, that obtaining a small business loan is going to be a time-consuming and intensive process. The average time for approving an application varies between lenders, but the SBA’s stringent requirements for eligibility results in review processes taking considerably longer than traditional business loan application reviews.
A new business line of credit may be another good route to raise your purchasing power in the short term. First and foremost, you won’t have to make a big payment every month to cover a loan’s principal and interest. Check out advancefundsnetwork.com for a business line of credit option that provides businesses with access to a predetermined amount of funds that they can draw from as needed.
If your costs will be moderate and mostly static, you probably have a good sense of how quickly you’ll be able to pay back creditors as you incur obligations. Ideally, that should be right away. Depending on the interest rates and repayment terms attached to lines of credit, carrying high balances for a protracted length of time could be problematic.
In contrast, drawing from a line of credit and repaying it promptly will work to your advantage in a few different ways. Using credit doesn’t necessarily hurt your credit score if you restrain your total utilization to a healthy range, hopefully not exceeding thirty percent. Also, when you make timely payments on an active tradeline, it can raise your credit score. Building up your credit can pave the way for more financing opportunities in the future that could drive development.
Automate AP
As you take on new commercial accounts with a multitude of creditors, it may make sense to transition to full AP automation. Investing in this type of payment solution is a smart practice for companies that have to make many individual payments every month for fixed amounts as well as companies that place regular orders with vendors. Automatic payment is a convenient way to lessen the workload of in-house staff responsible for approving payments, and it saves time for owners because it spares them from rushing to get their signatures on checks in order to make timely payments.
You can opt to hold back some of your payables from automated programs. When you pay service providers that issue invoices for new projects or ongoing maintenance services, you may want to be able to personally review what they’re charging you for before you send payments.
Rein in Spending
When you look for ways to spend less money, you have to be creative. Spending less shouldn’t entail having to go without the things that your company needs to function efficiently. Try to identify which expenses you can reduce or eliminate without compromising productivity. Shop competitively for products and services. Consider a comprehensive review of marketing and promotional expenses. As you look at this area of spending, draw from substantive data to determine which marketing and outreach campaigns are paying off and which tactics problems aren’t worth the time or expense.
If you’re concerned about how upsizing is going to pack on payroll costs, remember that you’ll need to assess your personnel’s job roles before making new hires. Make sure that you’re making the most of your existing workforce’s capabilities, and delegate duties and responsibilities with an eye toward cost-efficiency. It may be practical to engage an outsourcing service for assistance with administrative tasks while you redirect your employees’ efforts to growth-oriented activities. Ultimately, ongoing efforts to conserve resources and also make the most of them can keep your growth on track. Stay organized, set clear goals, and be consistent with your financial management practices.