If you want to make a big business move
like increasing your product line or breaking into a new market, you first need some research for planning out the strategies but you also need money -- lots of it. Without enough funds to finance your big strategic move, it's simply dead on arrival.
Despite having great workable plans, pulling out money from your operating budget to finance your new project is something you shouldn’t do, especially if it’s not included in your annual budget. If you do this, you will cut funds from some departments which will ultimately hurt your business.
That said, here are a few tips for freeing up enough resources for your next big strategic move however I would like to highlight that raising money from the normal financing channels such as raising capital or borrowing through direct loans or issuing bonds doesn’t contradict with the below suggested action plans.
Expedite account receivables
Collecting account receivables is one sure way to stall the inflow of cash.
You can turn this debt into cash more quickly if you teach your staff to expedite account receivables and one way to do this is by using a credit limit.
This will make a huge difference because you will be able to better manage the debt and your clients will respect this limit. Focusing on turning account receivables into cash will definitely make more funds available for your big move.
Add ‘expansion’ to your yearly budget
You most likely have a budget which includes all the important stuff, but there’s no ‘expansion’ in it and therefore, there are no funds put away for your big move.
I know that ‘expansion’ is really not something that automatically pops into your head when you’re creating your annual budget, but let's think about it for a second.
Wouldn’t it be easier to re-strategize and do something big to boost business growth? Of course it will, if you have the needed funds available.
It’s good to map out about 10 to 20% of your budget expansion and big strategic moves so you don’t go scrambling for funds when you need it fast.
Improve Your Marketing
Marketing is one thing that will always bring in more money and improve your cash flow. With improved marketing you can turn around ‘no funds’ to ‘enough funds’ your next business step.
To improve your marketing for more effectiveness may require that take a deeper look into your current marketing strategy and identify its failure and weak points, doing this will help you see what area you need to improve on.
Consider Invoice Factoring
Invoice factoring allows businesses to fund cash flow by selling their invoices to a third party at a discount.
Invoice factoring can be provided by independent finance providers, or by banks -- in this case they are factoring companies. Factoring companies fund your business to let you transform your business cash flow. Instead of waiting for payments, you’ll have more funds available to work with.
Monitor Your Business Credit
According to a Wall Street Journal survey, 25% of business credit reports have errors that make the business look riskier than they are.
This is a big problem many businesses have because without actively monitoring your credit reports, you may not know if your business credit is being negatively affected by errors.
Maintaining a good credit history also affects the interest rates you get on financing and the sooner you start to accurately monitor your business credit, the quicker you can build a healthy credit history to secure better business deals.