How to Manage Working Capital for Growing Businesses
Managing money can be difficult. When you’re focused on growing a business and increasing sales, it can be hard to plan for unforeseen circumstances. It is important to remember, however, to keep your businesses bank account ready in case an unforeseen circumstance does arise. Some circumstances that could throw your business through financial troubles are slow months, equipment breaking down, family issues that require some time off, or theft. If any of these circumstances occur in your business, you need to have some level of cash, above the normal level of cash for operations, to serve as a buffer and give your company some leeway. This money is known as “working capital,” and it is used to fuel your business’s day-to-day operations. The more money on hand, the more prepared you will be to take on unforeseen expenditures.
How Do I Know How Much I Need
For new companies, it can be difficult to estimate how much income you should set aside for the daily operating expenses. We recommend giving yourself a few months to track your income and spending habits. If you have a business credit card, you can look at your credit card statement during these few months to track your spending and put together a monthly forecast for expenses. There are typically quarterly taxes required by the IRS, so make sure to keep these in mind when planning out your monthly operating expenses.Should I Always Save My Extra Cash
One major thing we want to point out is that it is not a bad thing to spend left over cash on your company. Reinvesting in your company and putting more money in to buying new equipment is how you can help your company grow. It’s smarter to save just the right amount of cash for emergencies and use the rest to reinvest, rather than only saving money and not upgrading/expanding.
What If I Don’t Have Enough Money This Month
Even though it is smart to save enough cash to cover emergencies and daily operations, we recognize that not all businesses can. That is why at Harbour Capital, we offer a new Working Capital program. If you need some cash to help cover your monthly cost obligations, and emergency expenditures have bled through your funds, we are here to help. We can usually help you get around 10% of your net annual revenue, and we offer short terms so you aren’t paying off the cash loan for years. We are here to help companies that may have run into financial hardships get back on their feet and give them the money the succeed. Give us a call today for more information!