Business owners have one goal – make money. In the beginning, the goalposts move because it’s tough to keep your head above water. One mistake and the company may have to close its doors, physical and digital, to the public.
Staying liquid is an essential part of launching a startup for the first couple of years. Without money in the bank or the ability to secure it from third-parties, the debts will rack up and creditors will demand their pound of flesh.
Staying liquid is the answer, yet it isn’t straightforward. Here are the things you can do to try and make it a realistic possibility.
Lowering the company’s expenses is one way to ensure there is more money in the bank for a rainy day. As a usual suspect regarding cutting costs, you may think there are no more left to slash, but you would be wrong. There is always an area where the business overpays; you need to find it and negotiate a better deal ASAP.
Your rent is without a doubt the best example. Because it’s a contract, it’s tempting to think you have no leverage and can’t haggle but this isn’t true. Not only can you ask for a reduction as you’re struggling to find the money; you can also sublet.
Track Your Credit Rating
Borrowing cash from a lender is an emergency avenue which should always be open. The problem with some firms is that their credit rating is poor. As a result, the banks may not be willing to lend. If they do, it will be a secured loan which uses a valuable asset as collateral.
It’s in your interests to review and repair your credit report on a regular basis. Then, the creditors will see you as a trustworthy lender and sanction the funds. Check out the link to find out more about the things you can do to fix a bad credit score.
Sometimes, disorganization means clients and customers get away with not paying their debts. Because the accounts aren’t in sync, you may be losing money on receivables, the ones that are essential to liquidity.
There are a handful of things you can do to ensure people pay on time. Firstly, hire an accountant to keep tabs on the payments.
Secondly, follow up with non-payers on a daily basis. If the constant phone calls don’t encourage them to cough up, the lawsuit should.
The worst thing you can do is to pay multiple debts at the same time. Why? It’s because there is no flexibility. If you don’t have the cash, there’s no way you’re going to find several amounts in a couple of days.
Savvy businesses stagger their payments so that there is always something left in the emergency fund in case of a rainy day. That way, you’re protected as your cash reserves don’t leave the business in one lump sum.
Implement this advice and you should stay liquid. If in doubt, contact a professional and use their expertise to stay afloat.