Having sufficient working capital funding on hand is a dilemma that most small business owners face at some point in their operational lifetimes. You can’t properly run a business without getting close to the line once in a while. Sometimes it happens at tax time, sometimes during the dog days of summer, and sometimes during economic slowdowns like the one we are currently experiencing, but it always happens sooner or later no matter how good you are at accounting and financing.

Improving your working capital finance position to prepare for those hard times is essential if you’re going to survive them. Ask any of the hundreds of small business owners who watched their dreams go up in smoke during the recession because they were operating too close to the line. During generally profitable business times you need to be able to put it away and save it or you won’t make it through the tough times.

As the economy steadily improves and your cash position gets stronger, work on establishing lines of credit and cultivate relationships with lenders you can turn to if you happen to hit a bump in the road or two. Take out small business loans, even when you don’t need them, and pay them off quickly to avoid high interest rates. You can use the money to buy inventory and keep your own funds in the bank where they can gather some positive interest for you. They’ll also make a good bailout fund if you need it.

With cash resources you can always take out a secured loan, a good move if you can save a business, but a bad one if you’re going under regardless. Knowing the difference is what separates the winners from the losers. Understand what makes your business tick and where your income is coming from. Tracking demographics and sales trends is far more important than many other tasks you waste time on every day.

Streamline your operational costs. One often fatal mistake that small business owners make is spending too much when the profits are high. Treat every day like it’s a poor sales day. Chances are it can always be better anyway, so just act as if you’re broke all the time and can’t afford the luxuries. There will be plenty of time for those when you’re all done with this venture and ready to retire. Spend less now and that day will come a lot sooner than you expect.  

Business Loans, General working capital loans, working capital funding, working capital