Being the owner of a small business can be invigorating. Who needs to jump out of airplanes or climb mountains when you can build something with your name on it from scratch. Isn’t building a legacy what life is all about?
A critical part of building a successful small business is figuring out how to hack small business financing. After all, money does make the world go around – especially when it comes to your small business. However, you don’t need a Wharton MBA to build a successful business. In fact, having a big-name degree can get in the way of your success. With that in mind, let’s take a look at the hacks which will help you manage your business like a pro.
Why buy the cow, when you can have the milk for free? Well not exactly free, but the judicious use of contractors can help you accomplish more with less. This is especially true when it comes to non-core areas of your business, or areas which require deep knowledge but only for a short amount of time.
The benefits of this hack include tapping into experienced workers while reducing labor costs. Doing so will also reduce your liability when it comes to worker’s compensation and you will have more flexibility when it comes to hiring and firing.
Now using contractors is not the right fit for every position. For example, if you are running a coffee shop, then you probably want baristas and managers who are employees. But activities such as marketing, accounting, even product development can easily be shared with knowledgeable professionals who can give your business a leg up.
Deliver On Time, and Invoice Correctly
Two things that can kill a business’ cash cycle are late deliveries and improper invoicing. Not only do customers hate late deliveries, but late deliveries can delay when, and in some cases, how much you get paid. As such, you need to move heaven and earth every time to make sure your orders go out the door correctly and on time.
A big part of on-time shipments is making sure the paperwork which accompanies the shipment is correct. Improper invoicing not only eats up time, but it costs you money. Customer will delay payment as their finance department can’t match up the invoice and in some cases, they will even use this as a reason to ask for an additional discount. To take advantage of this hack, get your house in order. Deliver on time, and invoice correctly.
Banks Are Not the Only Game in Town
There was a time when your only choice for financing was to trundle down to your local bank and ask for a loan. Those days are long gone. The reality is that most banks today are not geared for serving the needs of small businesses.
It’s not that they don’t like small businesses – at least I don’t think there is any acrimony. It simply comes down to cost. One $5 million loan is more profitable than making many $1,000 to $5,000 loans.
As such you need to develop a network of lenders who understand the needs of small businesses and have programs to help them succeed. Find a lender who specializes in funding geared towards small businesses such as working capital loans, merchant cash advances or lines of credit.
This starts with having a budget and then continually checking it to make sure you’re where you’re supposed to be. You see, hacking small business finance does not take place in a vacuum. You need to have a clear idea where you stand at all times. This way you can make informed decisions on what to buy, or the right price to sell something.
This even extends to having an emergency fund in place. Whilst accidents happen, the best way to get through them is to be prepared. The simplest way to hack this is to set aside a bit of what’s left over every month in an interest bearing account which can be readily accessible when needed.
Then resist the urge. Don’t use your emergency fund for a three-week cruise. Let it build. You never know when needing it will be a matter of life or death. Depending on your industry, you should have anywhere from six to twelve months of sales saved up. Doing so will help you weather almost any storm comes your way.
As you can see, you don’t need an MBA to run a successful small business. But with some a bit of guts, a lot of determination, and these hacks you can make your way to the top.