Most business people want to grow their businesses, but they do not make sure what type of growth they want in their business. For instance—if every $1 increase in sales takes $1.50 in expense, then it is not considered good growth. Also, even in a case where every $1 increase in sales takes $0.25 in expense, how is the business financing the expense needed to create the sale? The expense is being incurred before you even get the sale, so how are you going to pay for it? Answering this question is part of good cash flow management and planning. The business will either get financing externally or internally or both. There is the availability of finance for all businesses.
How is your business running? Do you want to finance it appropriately? Do you know how you can do this? Finance for growing business will help you in the following ways:
Limit Growth: If your business has come to a grinding halt, it will help you protect the core of your business. By planning for growth, you will be able to grow your business reasonably.
Bank Financing: You can set up a line of credit that will help you with the ups and downs of your business so that every month you can make payroll and pay rent when cash flow is low. You should use a line of credit when cash is low and paid down or to zero when cash is up.
You can develop a relationship with your bank. The more comfortable they are with you and your business the easier it will be to get a loan.
Seek out investors who can help fund your expansion. The amount of your business and control that you give up depends on the type of investor you bring on board.
External Financing: You can get it before you need it, especially if you are in a period of rapid growth.
Internal Financing: Depending on your level of growth, you may be able to set aside cash as a reserve for expansion. Expansion costs usually include additional employees, increased inventory, and increased accounts receivables.
Use excess cash from sales to fund expansion and save interest costs.
Make sure your accounts receivables balances make sense. Too many accounts receivables could mean that your business is not doing a good job of collecting accounts when due. When you do not have good credit and collection policies, your cash flow can suffer.
Briefly Put!
If your business has come to a grinding halt or is not yielding sufficient profit, you can apply for finance for a growing business. Follow the tips mentioned above, and you and your business will get all the financial resources to continue growing.
