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31 Oct
How to Create a Rainy Day Fund for Your Small Business

Piggy bank with umbrella concept for rainy day fundAs a small business owner, one of the best pieces of advice you’ll ever get is to never get too comfortable when things are running smooth.

In the same way traffic accidents occur unexpectedly and natural disasters occur without notice, your business can also suffer painful emergencies. When it does, you need to be in a position to protect your business and keep it running.

Having a healthy “rainy day fund” can help you get through those unexpected bumps in the road.  Here’s how to get started

Start saving today

Whenever you’re in a position to stash away extra money, you should do it. Even small contributions, made on a regular basis will add up over time.  Create a solid savings plan that will act as a reliable backup in times of emergencies. The best way to do this is to set up a savings account and keep it separate from your other business and personal accounts.

Cut costs

Avoid unnecessary and extravagant cash outlays, even when your business is solidly in the black. There’s nothing wrong with rewarding yourself and your employees once in a while, just do not make a habit of it. For your rainy day fund to grow, you will have to avoid any needless spending. Remain disciplined and focused on growing the account and you’ll be glad you did when the need arises.

Consider supplementing your income

Any wise entrepreneur knows that it’s important to diversify their investments. Don’t be afraid to try out other business ideas that you believe can bear fruit. It does not always have to be your own business; you can invest in other successful companies to grow your money. You might also look for ancillary services that complement your main business.

Make the most of the up times

It’s normal for any business to experience highs and lows. Some months you’ll generate more income, and in others, you may have a very profit margin. During the slow times, it might be impossible to make any contributions to your rainy day fund. So it’s a good idea to make larger deposits when your cash flow situation improves.

Save your tax refund

Finally, you may be lucky enough to receive a tax refund from time to time. The best way to use that money is to channel it directly to your rainy day fund.

Consider alternative funding methods

Before raiding your rainy day fund, ask yourself whether the need for extra cash is a temporary or long-term one.  If cash flow issues are an ongoing problem, a revolving line of credit or business factoring may be a better solution.

Give us a call at 1-800-297-6652 or visit us online at www.americanreceivable.com to learn more about our accounts receivable factoring solutions and whether they’re a good fit for your cash flow needs.

31 Oct
8 Small Business Finance Tips

company cash flow statements folderRunning a small business can be tough, frustrating, and requires most owners to wear multiple hats.

While most owners are comfortable being involved in sales, marketing, production and even HR, many feel completely out of their element when it comes to financing.  While this is an area that’s typically better left to those with the necessary training and experience there are some basic things that every startup business owner should do in order to keep their company in the black.

Use dedicated business accounts

For your small business to thrive, it’s essential that you’re able to accurately track all of your business income and expenditures. To help you do this, you need to set up dedicated banking and credit card accounts for your small business and ensures there is no overlap between them and your personal accounts.

Have a budget and stick to it

You probably already have a personal budget. Keeping one helps you to prioritize expenses by separating needs from the wants. The same applies to your small business. Having a formal budget helps you prioritize your spending.

Prepare for big expenses

Don’t wait to be taken by surprise just because you underestimated your expenses. When creating your budget, it’s always best to overestimate your expenses a little in order to cover any unexpected cost increases and incidentals.

Be prepared for downturns and bottlenecks

Every small business has its ups and downs.  For some, the reason is seasonal factors that influence their market.  For others, slow-paying customers can have a negative impact on cash flow.  While seasonal fluctuations are easy to anticipate, cash flow problems can arise quickly and unexpectedly.  When they do, having an established relationship with a lender can be a lifesaver.  If borrowing from a traditional lender isn’t an option, you might consider invoice factoring to get the cash you need to meet your daily operating expenses during the slow times and to invest in new equipment, warehouse space or personnel.

Ask for professional help

Sometimes managing big numbers, accounts and cash flow can be overwhelming. Don’t be afraid to ask for help. Trying to muddle through can be disastrous for your business.

Have alternative investments

Don’t put all your eggs in one basket. Diversifying your investments will boost your savings plan while at the same time providing you with something to fall back on.

Manage your time

You’ve no doubt heard the saying “time is money”. The amount of time you put into your small business is directly proportional to how well and how quickly it will succeed.

Create a savings plan

Finally, the joy of every business owner is when you start making a profit out of your hard work. Being able to constantly and progressively save up is proof that your business is not hopeless after all. What’s more, savings are like water you store to be used in times of drought. A healthy savings account can get your small business through economic downturns, the loss of clients and other unexpected events.

Call American Receivable at about invoice factoring 1-800-297-6652 or visit us online at www.americanreceivable.com to learn more about invoice factoring and whether it’s the right solution for your cash flow needs.

17 Oct
ARC Continuing Relief Efforts

American Receivable Corporation is continuing relief efforts by offering special rates to businesses affected by Hurricane Harvey and extending those rates to those affected by Hurricane Irma. American Receivable has already aided eight Houston area small businesses in their recovery efforts in the last month with hopes to grow that number as it extends to Florida. Discounted rates start as low as .8% with up to 90% funding in 24 hours.

People helping people is what keeps America strong. Call us today and let us help Texas and Florida rebuild.

 

16 Oct
Hand holding a light bulb symbolizing an idea
5 Tips for Starting a Successful Business
 Starting a successful business requires a tremendous amount of time, energy, and in most cases, money.   So it’s important that you really enjoy what you’ll be doing.  The majority of startup businesses struggle during the first few years so you’ll need that passion to get you through the tough times.

Here are some other things to consider when starting a business.

Have a solid, written business plan

Most business owners spend months or even years mentally planning for the day they launch their new startup.  But putting everything down on paper will help you identify opportunities and potential pitfalls you may not have considered.  When creating your business plan, it’s a good idea to plan for the worst case scenario to make sure your expectations are realistic.

Hang on to your “day job” for a while

It can take months or even years before your startup company actually makes a profit.  If you’re currently employed, it’s a good idea to hang onto your current job for a while to keep money coming into your pockets until your new venture takes off.

Arrange financing for your new business

Even established companies experience slow periods and not having a financial safety net can be disastrous.  Startup companies have the additional problem having no credit history which is an essential requirement for traditional lenders.  Some private investors may be willing to lend you money based on the viability of your overall business model, but this too can take time and may come with prohibitively-high interest rates or other requirements.  Invoice factoring is a safe and effective alternative to traditional bank financing.  Factoring provides your business with almost immediate cash, and approval isn’t based on your creditworthiness.

Don’t fly solo

Starting a new business by yourself can be a lonely and frustrating experience.  Having a partner can help keep you focused and motivated.  And as the old saying goes, “two heads are better than one.”  Having a partner or small team who are invested in the success of your new venture can also help keep you honest about your expectations and provide you with encouragement when you experience the inevitable doubts and misgivings most startup business owners experience early on.

Develop a client base prior to launching your new business

Remember the film “Field of Dreams” about the baseball fan who heard voices telling him “If you build it, they will come”?   When it comes to building a customer base, things typically don’t  work that way.  Launching your startup business without customers can be a recipe for disaster, so don’t wait until after you’ve launched your business to line up customers or potential customers.  It’s better to have eager customers lined up, eagerly awaiting the launch of your startup than to try and land them once your business is up and running.

12 Oct
Hurricane Harvey
Is Your Business Prepared to Survive a Natural Disaster? 

Natural disasters can happen anywhere and at any time. Over the past several weeks the headlines have been dominated by three monster hurricanes and a 7.1 earthquake in Mexico.  If they’ve taught us anything, it’s that there’s no such thing as being over-prepared, and that goes for your business too.

Hurricane Harvey dumped record rainfall along the Texas and Louisiana coasts and the cleanup is expected to take months.  And the financial impact of the monster storm will undoubtedly be felt for even longer in the greater Houston area.  According to a recent marketwatch.com article, the Small Business Administration’s disaster relief program had received 2,117 applications for assistance from residents and businesses affected by Hurricane Harvey as of September 1.

Unfortunately, the SBA estimates that about 25 percent of small businesses that close due to a natural disaster never reopen.  The Federal Emergency Management Agency (FEMA) puts that number even higher, at around 40 percent. And for businesses that do reopen, the road to recovery is usually long and expensive.  The problem for most is the lack of a disaster plan. Here are three things you can do to make sure your business is able to get up and running again in the event it’s affected by a natural disaster.

Be Proactive Concerning Your Finances

Don’t assume that your bank and credit card companies will know that you’ve been affected by a natural disaster.  Instead, you should contact your lending institution immediately and let them know about the emergency situation. Most lenders will work with you to help you get back on track.  In some cases, they may waive fees or allow you to defer payments.

Low-Interest Disaster Relief Financing

As mentioned earlier, the SBA offers disaster relief for small businesses. One program provides loans to help businesses recover from property damages.  The program offers terms of up to 30 years, and interest rates of 4 percent or lower.  Another SBA program helps businesses recover from economic injury and provides loans of up to $2 million to help with expenses you would have been able to cover had you not been affected by a natural disaster.

Some lenders also offer special programs for new and existing customers affected by natural disasters.  At American Receivable, we’re offering discounted rates to businesses affected by Hurricane Harvey.   Our invoice factoring solutions require no lengthy approval process and funding in as little as 24 hours. Call 1-800-297-6652 or in the Houston area call 281-442-7000 to learn more.  You may also click here for more information.

Prepare for the Unexpected

As the old saying goes, “an ounce of prevention is worth a pound of cure.” Having cash reserves to meet your operating expenses for at least 30 days can help your business survive a natural disaster.

Unfortunately, this is easier said than done for small businesses that operate on tight margins.  If this is true for your business, now is the time to look for ways to pay off your existing debts and reducing your operating costs and put that money in a safe, interest-bearing account so it will be there in the event of a natural disaster.

For more information, check out these helpful disaster checklists and tips.

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