Is your cash flowing out faster than it's flowing in? This can happen for a number of reasons and can be a sign that your business is growing at a faster speed than you are ready to handle. Perhaps your best customer has given you a $100,000 order -- but you need cash right now to buy
supplies needed to produce
product. Challenges like this one are commonplace occurrences with businesses of all sizes. Without adequate operating capital, your ability to grow your business is limited. When this happens, you need a strategy that will either infuse your business with some quick cash or reduce your operating expenses.
Try one of these:
1. Hold a Sale. You reduce inventory while brining in some quick cash. Offer a discount or other incentive to customers who pay now.
2. Ask for Payment in Advance for Recurring Services. If you are offering web-hosting services, for example, offer one month free to customers who pay up front for 12 months hosting.
3. Lease Your Equipment. Purchasing equipment ties up large sums of money. By leasing, your money is freed up to be used for other purposes. Often it is possible to lease a variety of equipment -- including office equipment, computers, software, telecommunications equipment, vehicles and more.
4. Joint Venture with Another Business. Find a business offering services or products that are compatible with your own and offer to promote each other's business. For example, if you are selling health food products, offer to cross-promote with a business selling fitness products. You'll both enjoy increased sales.
5. Obtain a Line of Credit. Bank credit is usually subject to standard ratios of debt to equity, working capital and profitability.