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Having enough cash on hand – working capital – to pay for day-to-day operations is essential for creating a successful small business and yet accomplishing that task is actually much tougher than it sounds. It will require some careful thought and planning.

THINK BIG
Start by making some long-term plans and projections for your business. You need to have a very good estimate of how much money you plan to bring in over the course of a month and during the whole year. You should also think through and take into account which months or seasons may be fiscally slower. After understanding your financial incomings and outgoings for the year, it is helpful to build up a cash reserve to have enough working capital for those slower periods. When you can predict that you will not have enough funds through your own saving efforts, securing business financing before you need can help you through those times. Those financing options could include small business lines of credits, business credit cards with large limits or even private funding from venture capital or angel investors.

THINK SMALL
After making a long-term plan, it can be helpful to get into the financial details of keeping working capital flowing. There are plenty of strategies for getting money to come in faster than it goes out. You could try billing customers in shorter increments, say biweekly rather than monthly. While this would mean smaller payments, they would come more often and provide a more ready flow of cash. You could also require down payments from customers, depending on your business type. With some of the money upfront, you will be better able to fill orders. And if you are really serious about having customers pay on time, you could offer a small discount for those who pay their bills within the first 10 days or so.

Looking at both the big and small picture for your business can protect you from running out of working capital and help your business headed for success.


Search for Small Business Loan Sources and receive your matched lender list
AND received FOUR free Business eBooks worth $39.95!
Search for Small Business Loan Sources