Plan for failure and success will come your way.
You know business continuity is a common theme here. This term quantifies how well your company can withstand financial trauma. Disastrous situations occur all the time. Many owners and executives deal with the situation after the fact. With the right business continuity plan (BCP), you can avoid setbacks and immediately boost your profits.
If your business does not have a plan, read HubSpot’s guide and make one.
Use the tips in this article to better approach building your BCP. Risks come any time you execute new growth strategies. Build combative protocols to address the financial travesties that might come if your business cannot grow.
Do you already have a BCP?
That is perfect. The next step is to fine-tune your continuity plan. You should review it once or twice a year at least. Financial situations change all the time. The right contingencies for your continuity plan will vary by the current operations. Factor the present-day economic outlook and build your strategy accordingly.
Building a Continuity Plan for Profit
Look at the most basic factors of effective operation for your business. What do you need to sustain to maintain profitability? Consider the losses you can take that minimally impact your profit rate. Where can you take a hit to avoid falling under elsewhere that might hurt your business worse?
Damage control is important. In fact, the first factor in creating a BCP is your operational expenses. How can you guarantee that you will withstand financial distress? The best way to do this is to get as many financing channels as possible. If business goes south, go down the ladder of options and gradually turn to more expensive financing.
Look for workarounds in your BCP to avoid costly loans from ruining your biz. Balance your funds in a way that quickly pays off high-interest emergency loans. Look for collateral-based funding options to get out of the interest premium debt cycle.
A business impact analysis is what you need to do. This procedure effectively measures the landscape of your economic health. This analysis will identify high-risk variables in your business. Build contingencies for these situations in your continuity plan.
Maximizing Cash Flow to Facilitate Growth
Partner with a factoring company to restructure your cash flow situation. This specialty service allows you to speed up payment times. Forget about the 30 to 90 day wait time that occurs with most invoices. Through factoring, you can sell your invoice and get funds immediately. Faster access to cash flow gives you the power to economically scale your business. A snowball effect of profitability growth can occur if funding issues are holding your business back.
Invoice factoring fees vary by provider. Industry tailored solutions work the best. This service is especially common in staffing, trucking, and construction. Factoring is primarily a strategy that private companies offer. But a few select financial institutions provide it for clients. You should check with your bank to see if it is an option. If you have a good relationship, this might be more beneficial than going with a private company.
The factoring company collects funds from customers on your behalf. The invoice collection becomes the service provider’s responsibility. While it varies by lender, most companies front up to 90 percent of the invoice amount.
This service comes with a one to five percent fee, which beats most borrowing rates. The actual cost varies according to how old the invoice is and the pay-by date. You receive the remaining amount for your invoice once the customer’s payment goes through.
Secure Financials with Invoice Factoring
You thought factoring isn’t necessary? Think again. There are many reasons to justify partnering with a factoring company. Take a few moments to consider why it might benefit your business. Even if you do not need more capital, it is a great safeguard for financial ruin..
Faster cash flow might be that difference maker in your bottom line. What do you pay in interest to fund your operations? Factoring gives you quicker access and is usually much cheaper than borrowing from a lender. Businesses relying on credit cards will see major financial benefits from this method.
Remember, factoring is not a loan. You are selling your invoices outright. The factoring company is taking a great deal of risk. After building a relationship with the factor, it’s possible to get better rates and bigger advances. The maximum amount for your advance will vary depending on the factor too. Compare services to see which company will give you a fair shake.
New strategies can promptly change a financial situation. Businesses with funding issues should look for solutions before it’s too late. Your goal is to get ahead a dollar instead of staying behind. Your company does not need to be a prisoner to its bank account.