Options for Financing Your Small Business Growth

Have you ever been in a situation where your company is in a growth cycle? Notice how the cash flow becomes such a challenge? If you don't have the cash to purchase the goods up front, or cash to make payroll prior to getting the job completed and paid for, what do you do? If you don't do the project, how do you grow. It can be pretty stressful and tough to get through.

There are options out there. I know because I have been in this situation.

What was that? You say the banks turned you down because they wanted security... in cash? If we had the cash, we wouldn't need the bank!

There is nothing wrong with getting the help you need to get some working capital - as long as the funds are used for the purpose you are borrowing them for.

Resources are available through your local branches of CBDC and BDC. Their interest rates might be a tad higher than a bank, however they are the easiest people to deal with on repayment plans, longer amortization periods and, if you need to take a break for a month, they are just a phone call away.

Depending on the relationship, you might also get financing for a single project. Then, when you have been paid for that project, you can pay off the loan; or you can keep making payments and use the extra cash to finance another project.

There are also resources through the federal and provincial governments to assist with employee skills training, and programs to hire Nova Scotians who require work experience (e.g. START, WIPSI, WEI and Skills Online NS. Student employment programs, such as SCEI, are also available.

Here are links to some Province of Nova Scotia financing options:

• http://workplaceinitiatives.novascotia.ca/workplace-eduction/
• http://www.coursepark.com/ns
• http://novascotia.ca/programs/workplace-innovation-productivity-skills-incentive/
• https://novascotia.ca/programs/co-op-education-incentive/

Keep in mind, an updated set of financials is essential when applying for funding. If you need some assistance with updating your records, please get in touch!

Ways to Manage Cash Flow

I've already written about the importance of a cash flow plan. So, did it make you run straight to your desk and start planning? Keep in mind, most cash flow plans are a forecast of what you see happening in the next 12 months, or even as little as 6 months in some cases. Base it on the goals you have set for your business.

There are many factors that dictate what will happen in the time frame you selected. There are few things we know for certain, such as the cost of employees, loans, how quickly your customers pay their bills, and what your turn around time is to pay your vendors. Factor in things like future purchases and supplies, new employees and any capital expenditures, and, of course, paying yourself!

Some of my clients use software that sends out automated reminders to their clients. This way they are always aware of payments coming into their account and how late they are. One such method is to use an accounting software linked to PayPal.

Other ways to ensure your cash is there when you need it are:

• Ask for deposits when receiving orders; generally people don't mind paying 50% up front.
• Manage your Receivables properly; if your terms are net 30 days, ensure you receive your payments when due by possibly offering early payment discounts.
• Ensure a quick turnaround on inventory by not purchasing an abundance before it’s required.
• Invoice on a daily basis.
• Analyze which methods of receiving payment work fastest for you. There are so many ways to get payments today. For those on the road, there is even Square for debit and credit card payments upon delivery. PayPal, cheque. You name it!
• Never pay your own vendors until the payment terms are up. If you know a vendor will accept payment terms past 30 days, use this opportunity.

Always update your business plan (hopefully you have one of those!) and include a cash flow plan.

Need help? Contact me and I can help you prepare one.

Does Your Small Business Have a Cash Flow Plan?

A key component of any business finance is a cash flow plan. Most entrepreneurs create this plan when they have to provide a business plan for capital funding for an unexpected large project that they require goods and increased staff to complete. But don't wait!

How about on a day-to-day basis? Do you know how to plan to pay your vendors and staff, or even yourself?

Yes, having a successful business certainly helps! But keeping track of how much money comes into your business and how much has to go out - and WHEN - is key. A proper cash flow plan will help you make decisions, such as:

• how you can afford new employees, and possible capital expenditures to grow your revenue
• how to prepare for fluctuations in revenue
• the best way to receive money from your clients
• how best to fund unexpected large projects