More than 100,000 small businesses were directly affected when one retailer’s credit line offers were rescinded. Similar changes from other small business credit card providers have actually affected more than one million small business owners and that the situation may get worse before it gets any better.
There are ways that small business owners are protecting their businesses from “feeling the squeeze” of increased economic uncertainty.
Education, Followed By Careful Integration
One of the best strategies to help protect your business’ future is to educate yourself about all the potential products and services available to provide capital for your business, and to understand how each option might be best integrated into your business.
The first step is to clearly identify the different types of capital sources that might be available to your business (e.g., Business Loans, Leases, Merchant Cash Advances, Lines of Credit, Factoring, Investors, etc.)
The next step is to understand the requirements for obtaining each specific product or service (e.g., do you need collateral, down payments, a specific credit score, a particular relationship established, business plans or other paperwork, etc.)
When reviewing the above steps consider the following:
- How each option will affect the cash flow of your business (e.g., how your business will pay back, or meet the obligation(s) it undertakes, to access the capital)
- If the strategy your business will employ ensures the best possible ROI
- If your decision will have the desired effect upon the business
- What are the short- and long-term effects on your business
When researching the options your business will consider, try to identify every possible source and resource. Look at traditional providers, but also see if any industry-specific or other options are available. Be creative, and willing to think outside the box.
Of course, some economic conditions are beyond the control of any small business owner. However, by understanding how and when to use the various working capital options available to your business, you increase your likelihood of success.
What do you think? How creative have you been when protecting the financial future of your small business?
