One of the biggest hurdles for any entrepreneur is access to capital. If you are like most entrepreneurs, you are constantly looking for new ways to reduce your expenses and free up your cash flows significantly so you can be ready for anything, whether a slow season or an opportunity to expand.
The following are great tips to help you boost the business’s cash flows as well as enable you access to capital for entrepreneurs fast and easily.
Dust of your business plan
In an earlier article about starting a business, we highlighted why business plans are extremely important to ensure the success of any business. No doubt that when starting out, you were so eager to put your business down on paper. Most entrepreneurs get caught up with the day-to-day pressures of unmet deadlines and the vision that they had, most of the time, recedes to the background. As an entrepreneur who wants to access capital services, it is important to schedule some time with your board members, or your business partners, to revisit your business plan and update it accordingly.
Now that you have a good idea about your target market, you should have plenty of ideas on creating the 2.0 version of your enterprise. When you are done crafting the second version of your business plan, it is important to not allow it to gather dust again. It is important that you set some goals and frequently check in with your team to make sure that everything is being done and that you are on track.
Make sure that your budget is up to date
One of the crucial details about access to capital for entrepreneurs is getting the budget right. The nature of entrepreneurship is being agile in the face of change. Many trends, price changes from the vendors and suppliers, the effects of laws and ordinances, even road constructions will ultimately affect your budgeting. These are the variable forces that will set your budget in a new direction. That is why your budget isn’t ever going to be a spot-on prediction. Think of your budget as a financial plan, if you stay on top of it, you will be able to spot the trends early on and make the necessary adjustments right away thus reaping the full benefits or face-off of the problems before they become unmanageable
Check Your Credit Scores
If you are planning to access capital services or to raise your capital to expand or make improvements in the next year, checking your credit score is an important first step. You can make an inquiry about your credit score several months before gaining access to capital in the form of a loan. Even if you have a business credit score, certain business loans still require a look at your personal credit score, especially if you are a sole proprietorship. Visit Your.VantageScore.com to find the free resources to learn more about your credit score. There is also helpful information on what factors influence your credit score and the things you can do that can help increase it over the coming months to help you get the best rate possible.
Have a Tax Strategy to Gain More Access to Capital
It is important that you keep yourself aware of the tax breaks the congress has been passing from time to time for instance the tax break that Congress passed in December of last year. This saved so many small businesses, almost 20 percent on their tax bill. This year, we might see small business owners actually enjoying many opportunities to capture more tax savings with the right plan and strategy. For instance, if you are planning a large equipment purchase, you may find yourself in a better tax bracket, but we will have to wait and see the opportunities that present themselves. Have a meeting with your accountant to discuss the opportunities that will help you access capital services.
Pay Down Debt
One of the ways to best use the windfall of your tax savings and any savings of your business is to pay down your revolving loan debt. Doing so is a great way to raise access to capital should you need it down the line? Depending on the sources of credit, reducing your credit-to-balance ratio is one factor that could raise your credit score. Before you do so, make sure you have enough cash flow to meet your expenses.
Improve Your Account Receivable
If your business extends lines of credit to your customers, it may be worthwhile to implement a credit check policy on all new customers. Knowing they’re creditworthy before the fact can help you create the appropriate plan for them and protect your business. Credit reporting is also an effective way for even a small business owner to let customers know they are serious about collecting what’s owed. In the end, you will get paid faster and increase the cash flow.
The life of an entrepreneur means things can change drastically on a dime. A thorough check-in with your finances can put you in the best position for success.