Problems with cash flow are the most high-risk worries for startups. No matter how original or world-changing your idea, if you do not have the cash backing that you need, then you will be far more likely to falter before you even get started.
A financial crisis, whether it’s due to external influences or the opening profit generation of your startup, can do more than simply restrict your ability to scale. If a financial mishap occurs at any time, it can leave your startup exposed to closure. If you want a more secure startup environment, then maintaining positive cash flow is imperative. If your startup is having issues with finances, here are some of the key solutions that you need to be aware of.
Accessing Capital Through Lenders
Banks are no longer as open to lending money to small businesses as they used to be. Tight economic times have led them to be much more wary of lending out sums of money, especially if the reason for that investment is inherent financial issues. However, there are options to consider if you need quick access to a cash boost. You should consider:
- Payment Processor Solutions: These are often referred to as merchant cash advances. Put simply, your startup can get a loan and make repayments via a percentage of your credit and debit card payments. That means that you only make your repayments when you make a sale. This can be very convenient, but there are risks involved, and the interest rates can be prohibitive for many startups. This is a useful option to consider if your startup is in serious danger of running out of financial resources.
- Third-Party Lenders: One of the most common avenues to explore for startups, online lenders have become the go-to option for those in need of a cash injection to maintain growth through challenging financial crises. How much you will be able to borrow will be reliant on several factors, but lenders like com are fast becoming the financial alternative to banks, who are unwilling (and often unable) to loan money to startup ventures.
- Digital Currency Loans: A newcomer to the world of investments and financial models, cryptocurrency is not an option to be taken lightly. This option should only be considered if you already have experience in using Bitcoin, Etherium, or any of the mainstream cryptocurrencies available. Although they are slowly growing in popularity, the unpredictability of cryptocurrency values can make this a high-risk manoeuvre that offers even more risks than continuing to bootstrap.
Startup founders need to take time to consider where they intend to source their financial safety nets in times of a financial crisis. Do your homework before you commit to borrowing any form of capital.
Ideally, the profits that you generate will cover all of your costs, including the unexpected ones. In cases where cash flow has become an issue, it’s important that you don’t panic. Don’t make the mistake of taking action too quickly. Do your research and find the cash funding that most suits your growth strategy and your startup goals. The more that you plan for a financial crisis, the easier it will be to ride the wave until your finances stabilize.