Effective Small Business Working Capital Management by daniellahaims


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									Effective Small Business Working Capital Management Every business owner understands the importance of sufficient working capital for a business. This is particularly true for new start-up businesses that are just beginning to establish footing in the industry. The biggest financial challenges are often confronted during the business’s initial stage. And it is during the start-up stage that a new entrepreneur must learn how to properly manage his available resources. Factors that Affect the Working Capital Management Typically, an entrepreneur’s primary concern is having a stable source of funding. But aside from a reliable capital resource, there are other factors that can affect the working capital. For instance, legalities, organizational structure, and information system can make a big impact on one’s management. Unrealistic goals can also be misleading. Some business owners focus solely on producing big profit without considering other issues. At the start, the business may seem to run smoothly, but if the long term consequences are not readily anticipated, it could eventually mean failure for the business. How to improve Working Capital Management Effective management of working capital depends on several factors. For one, a manager must learn how to anticipate the status of the market and create back-up plans for his company. Unforeseen events or unexpected circumstances can disrupt a business at any moment. It is during these times that a business must learn how to survive. Setting realistic goals- both short term and long term – can also enhance the working capital management. What is your target goal for this month? For the next five months? For this year? What about for the coming year? Setting targets can help a business manager make smart decisions and implement efficient strategies to achieve his goals. Building new customer relationships and making them strong and lasting is also an important concern. Pay attention to possible disputes or issues between your company and your clients. Such disputes can also pull down or hinder the business’s cash flow. Ensuring good customer relationships is crucial in the sales and marketing aspects of the business. Establishing a reliable funding resource is of course necessary in keeping a steady cash flow. Today, business credit cards are often recommended not only for large corporations but for small businesses as well. Learning how to use a business credit card wisely and effectively would make a big difference in managing your working capital. Aside from business credit cards, experts also recommend acquiring the traditional source of business financing such as bank loans or business loans. Acquiring a real business loan would provide a reliable financing assistance for your business.

Both of these financing methods- business loans and business credit cards- not only provide financial assistance but helps a business build its credit history as well. Building your corporate credit is an important preparation for the future growth of your company. Clearly, more is involved in successful working capital management than just the acquisition and distribution of business funds. A new business owner must not solely focus on these two things alone but instead try to consider other factors that affect business financing. Resources for Start Up Business Credit Cards

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