Most companies want to grow their income but do not pay attention to ensuring it is the right type of growth. For example, if every increase in sales of $ 1 requires a fee of $ 1.50, the growth is not good. Also, even in cases where every $ 1 sales increase requires a cost of $ 0.25 how it finances the business needed to create sales. The load is being issued before you even get a sale so how will you pay it? Answering this question is part of good cash flow management and planning processes. Business will get financing internally or externally or both.
A good cash flow management plan must estimate how your business plan to use cash includes a serious expansion plan (not a pie in the sky) and where the cash will come.
Internal financing – depends on your growth rate, you might be able to set aside cash as a backup for expansion. Expansion costs usually include additional employees, increased inventory and increased receivables.
Use the advantages of cash from sales to expansion of funds and save interest costs.
Make sure your receivable balance makes sense. Too many business receivables can mean that your business doesn’t do a good job to collect accounts at maturity. When you don’t have a commercial credit and a good collection, your cash flow can suffer.
External financing – Get before you need it, especially if you are in a fast growth period.
Bank Financing – Building a credit line that will help you with up and down your business so that every month you can make a list of salaries and pay rent when low cash flows. Loans must be used when cash is low and paid or zero when cash runs out.
Create a relationship with your bank. The more comfortable them with you and your business is easier to get a loan.
Investors – looking for investors who can help fund your expansion. I prefer to hand over most of my small businesses for the opportunity to have a small portion of a much larger business. The number of businesses and controls you provide depends on the type of investor you are carrying.
Limit growth – if everything fails to slow down your growth plan to protect your core business.
By planning growth, you must be able to grow your business fairly.
Follow these tips and you and your business must have financial resources to continue to grow your business.
