A large number of small businesses go under every year in the US due to financial shortages. In addition, a large number of failed businesses could have been saved with a small business loan. The fact that the owners of the concerned companies did not realise in time that they needed a loan is indication of an ongoing issue; small businesses often do not realise when, or if, they need to take a loan.
Making Sense Amidst the Confusion
To help make small business owners more aware of the facilities they have at their disposal to keep the business afloat even in trying times, as well as to keep them aware of their loan opportunities, the SBA has taken multiple steps. However, SMEs still need to know the signs that they are in need of financial aid, before they become too apparent.
On discussing the matter with experienced and established business heads, the following factors seem critical in helping the budding entrepreneur decide whether it’s time for them to seek out a loan or not.
Insufficient Cash Flow
Maintaining a constant cash flow is not always feasible, so ups and downs are to be expected. That being said, if the business owner finds it difficult to maintain an efficient cash flow for a significant amount of time, it should be seen as a sign that it’s time to seek out a business loan to stabilise things.
It should be noted that in most type of businesses, there is often a delay between supplier payment, and customer payment, so a timely business loan can help stabilise the cashflow in between.
Staking Personal Assets
It isn’t uncommon for small business owners to stake personal assets on the line, hoping that they will make it all count when the business breaks even. Of course, that has happened and can happen in a lot of cases, but it is still an ill-advised risk which qualifies as a mistake.
If an SME owner is looking at personal assets to meet the demands of his/her business, it is high time that they start seeking out a small business loan instead. It doesn’t matter how small a venture is, or how small the amount is, business assets and personal assets must be kept separate from each other to stop either from dragging the other down.
An Unprecedented, Big Order
Big orders are usually a cause for celebration, but a problem soon surfaces for small businesses in light of an unprecedented big order as well; they do not have the funds necessary to supply the order, or their inventory just isn’t enough. Instead of letting go of the order, compromising on quality, or staking personal assets, this is an ideal time for SMEs to compare loans and find one that’s best suited for them to fulfill the order, without paying excessive interest rates.
These are the most prominent signs that small businesses should be aware of to keep themselves from drowning, especially during the initial years. It’s easy to forget that in international business, pretty much everyone is in debt! The successful ones only manage to pay it off on time with due diligence.
