Thursday, December 02, 2010

The One Thing You Need Most in Business: Good Cash Flow

Profits are good, but if they're seasonal it can crimp your cash flow on off months. The one mistake new entrepreneurs make in business is not planning for shortfalls in cash flow by locating a business loan option ahead of a cash flow emergency. With insufficient cash flow, your business can teeter on the brink or lose valuable opportunities to expand. Either way, if you plan ahead and learn the ins and outs of proper cash flow, you won't be caught short without enough notice to bridge the gap with emergency loans.

Plan Your Cash Flow

If your business is seasonal, you need to be aware when your cash flow will dip. Save enough to carry you through poor months or have some loan options available so that you can continue to make payroll and keep your doors open. Many companies fell apart during the recession because they could not gain access to conventional credit lines that helped them maintain their businesses. However, there are other alternatives and as a business owner you should know about all of them.

Research Lenders

Take a look at what types of alternative lending is available, in case we have another credit crisis. Merchant lenders can provide a loan based on your credit card receivables, instead of your business credit score or some form of collateral. This can make these types of loans easier to get when other forms of credit dry up.

Stand Ready to Profit

By planning ahead, you will have access to money to help expand your business when an opportunity arises. Maybe you want to fund the purchase of new infrastructure in your business and the government is now offering rebates. If you can't locate the money, the rebate will be meaningless. In cases where you stand to lose more by not taking action than to take action, secure the cash flow so that you have the funds necessary to progress as a business.

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