Your money, your business! It makes sense to want to maximize your business’ profits. First review what you already have going on. For example your breakeven point. What are your cost vs. your profit? A good way to figure this out is to realize your breakeven point -where you quit loosing money or showing a negative return on investment.
1.) Keep your breakeven point low:
This means watch your spending, both on a personal side and for your business expenses. Have you ever wondered why so many startups are launched by young entrepreneurs with little to no major financial obligations? It’s simple really-they tent to have no mortgage payment, no kids to support and are most likely to have a low monthly spend rate.
Your breakeven point is important because you really don’t know in which month/year you will in fact break even. So until this happens, spend as least as possible. Running your business in a lean manner by keeping overhead at a minimum will buy you more time to get your formula right, thus reaching your breakeven point much quicker.
2.) Maximize your ‘outside’ income:
Consider alternative sources of income. Tap friends and family to help out with some seed money to keep the lights on; a partnership agreement with an expert in a field that you may be lacking or not as familiar in. Remember 100% of a company that makes zero is much worse than owning 50% of a company that generates a profit every month / year. Think outside the box, use people in your network to help you grow your business. Every little bit helps define brand and guide you on the most efficient path to success.
3.) Seek other types of external funding:
If you still find your business is in need of additional cash flow to grow, consider grants, government loans and additional opportunity available from your local small business administration. For example in Arizona we have a platform called the Arizona Innovation Challenge, in which funds can be won by submitting your business plan / idea to a panel of advisors that will consider your company for capital investment, that does not need to be paid back and does not dilute your company stock or position.
If you’re managing all your resources correctly and see that your business is starting to have some success, and you’re adding new customers that want/need your products and/or services then you may want to consider leveraging your company assets to help grow your business faster. For example, selling your outstanding accounts receivable invoices at a discount of their face value (factoring) for immediate cash flow.
4.) Accounts Receivable Invoice Factoring:
Did you know there are finance companies called (factors) that are willing to buy your open accounts receivable invoices for cash? You get paid for your invoices within 24-48 hours upon invoicing your customers. No need to wait 30,45 or even 60 days to be paid for work you’ve already completed and or products you’ve already sold.
Why should you’re business struggle while your customers use your money / products / services to grow their business. With that being said, most companies do practice some form of invoicing and by doing so have to wait to be paid from their customers. A majority of business owners have discovered factoring and know that they are able to increase their business cash flow very quickly by partnering with a factor.
If your businesses is not in the position to become the financier of your customers, and waiting for payment just feels unproductive or unfair, then visit Factor bid to find the best factoring company to help finance your accounts receivable business asset invoices. Factor bid gets you a few offers from factor finance companies, so you get competitive offers and the best deal when selling your invoices at a discount. When factors know they’re competing to buy your invoices, there offers are going to be more aggressive in order to earn your new business.
When you practice smart business tactics like factoring your invoices, you’re able to utilize the factor financiers money to grow your business faster instead of your customers using your money to grow their business, while you sit and wait for payments.
Benefits of Partnering with a Factor Finance Company:
Factors help you steam-line your accounts receivable collection process and make sure your customers are paying as agreed. When selling your invoices and getting cash with 24 hours, you’ll have a good idea of what your predictable cash flow is every month. This is important in realizing your breakeven point as well as applying additional capital to key parts of your business that are generating revenue.
Factors also lend a hand with vetting new customers. Factors have tools that you can access that help you decide if a new potential customer is a good fit for your business – i.e., do the pay their bills on time, are they in good standing and ultimately making sure you get paid for your contribution.
Insure your money with non-recourse factoring, to help limit your businesses liability in collecting on open invoices, like when a customer all of a sudden decides they don’t want to pay you.
As long as you’re bottom line increases, and your business profits continue to grow, the small fee a factor finance company charges is nominal in the grand scheme of things. The important thing is knowing you have that money and not worrying about customers failing to pay you.
Run your profits to the max – and grow your business efficiently by utilizing everything you have access to. If you ever wonder how your competitors are doing so well, there is a good chance they’re following most of the simple practices outlined in this post. Good luck and keep on working hard everyday and at the end of a month / year / 2 years, etc – you’ll have something you and your family will be proud of.