It’s a sad fact that most businesses don’t survive – according to a recent magazine article, a staggering 96% never make it to their tenth anniversary. In many cases, the failure is due to cash flow problems rather than any structural difficulties with the company or its business sector.
In fact, many of those businesses were both profitable and growing but were simply unable to translate profits into hard cash. This may sound counterintuitive, but it’s precisely when companies are enjoying a period of rapid and sustained growth that they are most at risk of cash flow problems, as they will need to invest in new people, plant and stock before being paid.
It can help you grow
One of the best reasons for taking out a business loan is that it can boost your profits. On the one hand, you may need to take on new people, invest in improved equipment or launch a marketing campaign that could pay dividends and on the other you cannot risk being unable to pay your bills. A business loan can square this circle, allowing you to do all these things simultaneously.
You simply need to be certain that you factor loan repayments and interest into your cash flow projections or you could be storing up significant problems for the future. However, even if the loan is relatively expensive you’re still ahead of the game if it generates additional profits that more than cover its costs.
It can improve your credit score
Credit scores can seem baffling: borrow too much and they go down but borrow nothing and they will also be poor. By taking out borrowing and paying it back, even if you don’t urgently require the additional finance, you will significantly enhance your score and reduce your costs of borrowing in the future.
Of course, some extra cash on hand won’t go amiss and you will almost certainly find something worthwhile to spend it on – whether it’s that new website you’ve always promised yourself, an enhanced stock management system that will make life easier or a key employee who can transform the way you think and work.
You can tame a troublesome cash flow
If your business doesn’t grow, it’s almost certain to fail. Yet as already noted, it is phases of growth that present the most significant cash flow challenges. A business loan can avert this problem, enabling you to power growth whilst having the cash on hand to pay your people and your bills.
You can deal with unexpected risks
Even if you’re in the lucky position of having a positive cash flow during a period of growth, it doesn’t take much to upset your financial projections. If a key piece of equipment fails, you’ll need to replace it fast to stay in business – and chances are you haven’t planned for such an eventuality. With the right loan facility on hand, this kind of crisis needn’t become a disaster.
For all these reasons, access to the right business finance can transform your future – and significantly increase your chances of long-term success. As alternative lenders, Cashsolv business finance has quite different acceptance criteria from banks.