Did you know that according to the Small Business Administration the 23 million small businesses in the United States account for 54 percent of all sales? How about the fact that small businesses provide 55 percent of all jobs and 66 percent of all net new jobs since the 1970s?
Those are pretty telling statistics that I’m sure many people, small business owners or otherwise, are not aware of. I bet if you’re a small business owner you are familiar with the sayings ‘it takes money to make money’ and ‘timing is everything.’ I’m not sure who originally coined these sayings but they are somewhat true and they are somewhat intertwined. When you have access to cash flow is equally as important as having it to begin with and is often the foundation of a successful company, besides a great idea of course.
Small business success can start with a loan or gift from a relative or perhaps a first customer that believes in what you’re doing. But when it comes to cash flow, there’s no app that can help; and often times there’s no relative waiting in the wings with an open checkbook. There are, however, options.
- Credit cards – Can be dangerous and potentially damage your credit score and ability to borrow money
- Loans from family and friends – This is ideal, but not always an option, and, depending on your family dynamic, can cause stress
- Equity partners – This too is not a bad option, but you need to choose wisely. You’ll be giving up some control of what you’ve worked hard to create and that may, or may not, be wise
- Bank loans and SBA (Small Business Administration) loans – Loans can be hard to come by for a small business, and can often carry high interest rates or require personal equity
- Slow-pay your suppliers – This will not win you any favors from suppliers that you may be depending on
- Hold back on paying payroll taxes – Not advised! It’s never smart to get behind in paying the IRS
- Slow-pay employees – Your employees are part of what defines your business. Putting them in a world of hurt will only damage your reputation as a small business owner
- Pester your customers to pay you faster – This can end up back-firing, causing them to slow pay you
- Factor your invoices – While we certainly favor invoice factoring (hey… it’s what we do), it can help you infuse your business with the cash you need to grow your business and strike while the iron is hot
- Avoid having to wait 30, 60, or even 90 days to get paid on an invoice
- Quickly access their working capital
- Gain the cash they need to cover immediate business expenses
- Accelerate business growth and gain more customers
So while it does often take money to make money, at least there is more than one option at hand to generating cash flow. And didn’t someone once say “the more options the better?”