ObamacareOne of the biggest challenges faced by small businesses is the ability to manage cash flow. Without a large amount of capital sitting in the bank, small companies need to find creative solutions in order to keep cash flowing and their business running. Some of these solutions include:
1. Develop a relationship with a credit provider. Find a reputable company and work with them on a regular basis, even if you just take very small loans. If you have established a solid working relationship and they are comfortable with you, this lender is more likely to help you out during bad times.
2. Establish a rainy day fund. It can be tempting to re-invest all of your profit into growing your company, but keep in mind that business may not always continue at the same rate and that unexpected expenses will occur. Don’t try to grow too fast, and take advantage of the good times to build your rainy day fund.
3. Don’t pay all your bills at once. It may feel easier to sit down and write checks to cover all of your operating expenses on the first of the month, and be done with the task. But cash flow coming into your business can be uneven, and you don’t want to drain your account just before a lull in business. Instead, write the checks, file them according to the dates you need to mail them, and then stagger your payments so that everything is paid on time but not all at once.
4. Don’t rob Peter to pay Paul. Some small business owners make the mistake of using sales tax money to cover daily operations, and then making that payment later. The problem is, you could end up paying more in fees, penalties, and interest if you use sales tax as business capital and then are unable to turn over the money you owe. Deposit sales tax into a separate account each day.
5. Evaluate your payroll system. If you take in a steady stream of cash every day, then paying employees on a weekly basis might not be a problem. But if your revenue tends to be uneven, paying employees on a biweekly schedule or twice monthly might be a less stressful option. You may also want to try a payroll
Steve Amante is the President and CEO of Amante & Associates Insurance Solutions, Inc. To learn more about Healthcare Reform contact Steve Amante or Frank Faldmo the firm’s Employee Benefits Advisor at (951) 676-8800 or visit: www.amanteandassociates.com
