Business Cash Advance & Business Financing Alternatives 

Financing Guidelines for First-time Small Business Owners

Financial planning for best cash flowAs many entrepreneurs observed, school prepares one to be an employee, mentors prepare one to own their own business. Unlike corporate retirement plans, financial planning for entrepreneurs demands a hands-on, forward thinking approach. US Business Finance Corp has worked with many small business owners and understands the challenges and rewards of business that appeal to entrepreneurs. Our alternative business financing experience has led us to compile the following financing guidelines for business owners starting out on their own enterprise.

Many beginning business owners enter the market carrying a school loan as well as credit card debt. More than making up for the debt is the entrepreneurs’ passionate vision of their business and financial goals. In preparation for the next business building steps, write down your financial goals and the general steps and time necessary to achieve those goals.

Next, review your safety net. Looking at your personal monthly budget, how much do you need in your emergency cash reserve account to cover you for three to six months? Are your business, life and health insurance policies adequate to provide financial backup for your company and family?

Finally, categorize your debt by balance and interest rates.

The entrepreneur’s task is balance the use of their cash flow between paying off debts and placing funding in areas that will multiply their financial investment. Businesses that never invest never break out of the cycle of forever paying off debts. Investments in businesses and real estate not only have the benefit of accruing value, but can also be leveraged to pay for themselves – creating wealth for the small business owner or investor.

Managing debt, especially to free up cash for operating capital, has several areas to examine:

  • Switching credit cards to merchant credit card service providers with lower interest rates and fees;
  • Buying a smaller house in order to build equity faster and keep monthly payments down;
  • Limit the number of installment loans you allow yourself to take on for cars or appliances; and
  • Check to see if there are ways to extend student loan payments to free up cash to pay down higher interest loans.

In managing your debt, always discipline yourself to reallocate the saved funds toward either further debt reduction or to your savings and investment funds. Resist the temptation to use the freed up funds in unplanned “consumer exuberance”.

Start investing a portion of your cash flow into your retirement account. Consult with your accountant whether a 401(k) or and IRA would suite your business best. For small businesses IRAs may be a better route since 401(k) have more stringent federal guidelines and higher operating costs than IRAs.

Finally, work with your accountant and attorney in structuring your new business for either building it up and selling it or if building for long-term committment. Enterpreneurs have found building one business and selling it brings them the capital to launch their next venture. On the other hand, having one successful business can also create a cash flow that can support the opening of a second store. Setting the foundation and timeline in the beginning allows you to benchmark your progress and see how well you are following your business strategy.

US Business Finance Corp has the financial proficiency to help new small businesses. If you find yourself in a temporary cash shortfall, contact us, our main expertise is delivering short-term working capital solutions, usually through our business cash advance program. When cash gets tight, time is of the essence especially in emergency circumstances. Once your application is approved, your cash advance is wired to your account as quickly as possible, usually within 5 business days after approval, 10 at the outside.

Comments are closed.