No one ever said small business ownership was easy. According to Key Small Business Statistics, approximately 70% of new businesses live to see their fifth anniversary – that’s a half-decade drop-off rate of roughly one-third.
Those that do make it to the five-year mark aren’t totally in the clear, either. Businesses, big and small, routinely run up against financial trouble. Whether it’s due to financial mismanagement, messy accounts receivable, scaling issues, or unforeseen circumstances (a problem exacerbated by COVID-19), these financial troubles can accumulate and eventually threaten a small business.
If you feel like you are continually running a hurdle race with stiff legs, it’s time to limber up, connect with business financing experts and get your business back on the proverbial track. To help you do so, here are four common financial hurdles small businesses face, and how you can leap over them.
The Banks Won’t Help With Your Business Line Of Credit
Your business needs money to grow and thrive. Unfortunately, when you need the money most, banks can sometimes leave you high and dry. According to the National Small Business Association, over a quarter of surveyed businesses said they were unable to get the funding they needed. In other words, if you are having trouble securing a line of credit, you’re not alone.
Luckily, you can still turn to business finance experts who find creative solutions to funding issues. Look for an experienced team that can base your line of credit on accounts receivable rather than your financial ratios.
You Experience Cash Flow Problems
A limited or inconsistent cash flow is one of the most common financial issues a small business will face. Cash flow issues can hamper your ability to operate effectively, pay your bills and grow.
To help get your cash flow back on track, have precise cash flow projections. To calculate these projections, look at historical cash flow data and account for contingencies, like economic downturns, shifting consumer patterns, and industry developments. You can also experiment with stretching your accounts payable (without being late) and shortening your accounts receivable window.
You Face Unexpected Business Expenses
Let’s take the example of a commercial trucking fleet. You have a list of business expenses, but they exist in an ideal world. Then, one or more of your trucks break down, requiring major repairs. Do you have a plan?
Unexpected business expenses shouldn’t be fully unexpected. It pays to be cognizant of all potential risks and worst-case-scenarios. If you should run up against a genuinely unexpected expense, contact business financing experts. Building off the example above: a business financing expert could help you with quick, simple equipment financing for major repairs, allowing you to jump the hurdle before it negatively affects your business.
With enough foresight, and the right business financing experts in your corner, you should be able to clear the financial hurdles and join those 70% of businesses that prosper in their first five years. And if you stumble, just remember: you can always get back up.
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.