If you run a small business, having the necessary financial resources to take on more staff, real estate, or stock can be tricky. You may not have vast amounts of capital like a large corporation, so trying to free up finances within your business can be a minefield.
After all, the majority of your finances will be tied up in important parts of the company – such as staff wages, property rental agreements, stock orders, and overhead costs like monthly electricity payments.
However, this is not to say that it is impossible to free up finances within your small business. It just requires you to think outside the box and be savvy with how you handle your money. Here’s how to free up money in your small business.
Invoice Factoring Can Help Free Up Cash Flow Faster
One lesser-known option available to you as a small business owner is invoice factoring. If you haven’t heard of it before, invoice factoring helps you unlock the money tied up in pending client payments. Every business owner understands the stress of sending an invoice to a customer and waiting weeks or even months to be paid. This can be terrible for your commercial balance sheet because you have large gaps between your bills and your client payments.
To alleviate this burden, certain financial institutions offer to pay you the money your client owes you, and then take over custody of the invoice (thus being paid by the client at a later date). If you need money immediately, this is a good option to consider.
Take Out A Loan
Alternatively, if you need to free up finances in order to reinvest in your company, then taking out a loan with a bank could be worth considering.
For example, if you are only a small business but you want to buy a larger warehouse in order to store more of your products (and subsequently being able to sell more products to expand your market share), then you could take out a loan to cover the upfront costs. Bear in mind that, like any form of debt, you should only go down this route if you are certain that you can pay the loan back and that the additional money genuinely benefits your company.
Take On Less Real Estate
Of course, you don’t need to find money from exterior sources if you want to free up finances. There will likely be a good deal of capital invested in your business already – with the most obvious example being any real estate you own.
If you own an office block which you know is too large for your needs, you could sell it and move into smaller premises, freeing up extra money in the process. On the other hand, if you want to keep your real estate but still need additional finances in the short term, you could renegotiate a deal with your mortgage provider.
Decrease Your Team Size
If you don’t want to borrow money or endure the stress of remortgaging your property, there are a number of smaller-scale solutions to your problem. You could, for instance, streamline your company to save money, cut back on production, or cost cut by asking staff to work from home instead.
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.