Running a small business is no small feat. In fact, most small business owners or startup entrepreneurs will say that it is a big deal – a very big deal!
One of the biggest challenges small business owners face is managing cash flow and funding for their business. If you belong to this group, you know that it isn’t easy to manage your business’s cash flow and working capital. You have to face many hurdles that come your way, such as delayed payments, unexpected downfall in demand, and rising costs. The challenges are never-ending.
However, with strategic planning and setting the right goals, there are some ways you can manage your cash flow and survive (or be better prepared) for a cash crunch!
Ways to Manage Cash Crunch in Small Businesses
A cash flow crunch can be managed and avoided to a certain extent if you consider the following options.
- Postpone Unnecessary Expenditure
Whether you’re facing a personal financial emergency or a professional cash crunch, the rule of thumb remains the same. Not to spend money until it’s super necessary! Cancel or postpone all unnecessary expenses. Also, study your buying pattern and spot the gaps that need to be filled by being more cautious.
You would find some requirements that can be easily fulfilled later so you can get some time to get back on track with your finances. Always postpone such expenses. You can look for getting a quick loan from various agencies to meet your expenditure.
- Explore Small Business Funding & Financing Options
Various financial institutions, credit card companies, banks, and FinTech platforms such as KreditBee provides personal loans for self-employed professionals. With KreditBee, you don’t have to worry about your credit score, as new-to-credit (NTC) users can also be eligible. Plus, you can rely on a hassle-free online application process with quick disbursal.
Search for such options in your dry spell and stay equipped to deal with urgent and unexpected funding needs. You can also cover the dearth of your working capital with the help of a business loan and line of credit. A business credit card can also be convenient for paying your daily bills.
- Strike a Balance Between Receivables and Payables
One of the most common causes of a small business cash crunch is payables surpassing the receivables. Credit buying and selling are common in the B2B ecosystem. But sometimes, you might not get your due payment, and your creditors are knocking on your door for payments.
You can request your creditors to cooperate with you during tough times. If you’ve worked hard to establish goodwill in the market, your creditors will probably oblige.
- Be Updated With Important Payment Due Dates
While cutting down on non-essential expenses, remember to keep a track and due date record of your essential costs that can’t be postponed, such as salaries, rent, and utility bills. Count your EMIs, but before that, ask for some margin from your lender.
Make a list of these payments along with their due dates. This way, you can manage the limited cash on your hand for due expenses on time.
- Analyse Internal Funds
Desperate times call for desperate measures. The investments and funds you created are for the growth of your small business. But they can be used in such times as well. Before pushing the panic button, find the internal source of funding you may have.
Any ULIP policies, stocks, mutual funds, or any other bankable asset can be your help for efficient cash flow management during crises.
- Find Partners & Investors
Individual investors and companies are looking out for potential business ventures to invest in. And they like to invest early when the business is small to get maximum returns with the growth. If you can convince any such potential investor to invest in your business, all your cash flow management difficulties will vanish with a poof!
The Bottom Line
A structured approach can help you eliminate any cash crunch with flying colours. Be calm, evaluate your possible solutions, and choose the most suitable one.
Remember – planning well, sticking to the plan and borrowing when needed is key! Borrowing or getting a quick loan when needed is a common practice and works well for those who plan well. So, don’t hesitate to apply for a small business loan to fill the gaps in your finances and beat – or – avoid a cash crunch altogether!
Tanvi Kaushik specializes in Content Marketing and works with the Digital Team at KreditBee – India’s fastest personal loan platform where self-employed and salaried professionals can easily avail of personal loans in just a few minutes when in need of quick funds.
Tanvi writes to-the-point articles on personal finance and budgeting which are truly appreciated by her readers. She is committed to making money matters easy to understand even for the layman. Her commitment to her work doesn’t stop her from pursuing her hobbies of hiking, trekking, and going on adventurous trips.