Bad Credit Business Financing: Don’t Assume when it Comes to your Cash Flows
Small business owners with bad credit have financing challenges which make it more important that they pay attention to their cash flows. The dearth of traditional small business loans for bad credit applicants means that for financing they will often have to seek out a working relationship with an alternative capital provider, where bank activity is more important than credit when underwriting. Additionally, the marketing budget of their company has to be tightly managed in order to ensure that it is able to create ROI, since every dollar that goes out the door needs to be made back with little room for error. In order to make sure that they are not losing money, small business owners should strive to create good habits for themselves and be cognizant of the effects of their budgeting choices. Choosing to invest in one area on a limited budget means that you may have to divert resources from another, making identifying the strongest performing areas of your business into a priority. Should a program have funding diverted from it before its impact is fully analysed, it could be the case that the program had a disproportionate effect on the rest of your operations that could wind up getting out of control.
Stay up to date on your bank activity. You should be able to account for every deduction and deposit. Not only will this help keep you out of hot water by making problems apparent before they get out of control, but it is also important to know when to cut things off if they aren’t producing for you. Often times, you may be subscribed to renewing services or incurring automatic charges for activity that you might not otherwise notice. Don’t allow any aspect of your cash flow to catch you by surprise, as you will quickly come to regret it.
Eliminate wasteful programs and habits. The more attention you pay to your cash flow, the better understanding you will begin to develop of what works and what doesn’t for your business in terms of making money. Be aware that you should also be on the lookout for what is costing you money. Some expenses are just part of doing business, but others can be done away with in the name of bringing the costs back into the positive cash flow of your business.
Most importantly, don’t make assumptions regarding what’s going on. The only way to really know what the lay of the land is like is to look and see for yourself. Never make the assumption that your business is making a certain amount of money. You should know for sure, otherwise you can spend valuable time structuring a budget around unrealistic projections.
Photo Credit to Sebastiaan ter Burg on Flickr