Most small business owners are concerned about their cash flow. While it may seem like a common fear that’s just part of running a business, a new poll has uncovered a troubling side effect of this cash crunch: A majority of small business owners are missing out on sales revenue as a result.
Manta’s online poll found that 60% of small business owners have worried about a lack of consistent cash flow affecting their business. Of those owners, 75% said they have missed a sale or passed on a business opportunity because they didn’t have enough cash to support the growth.
Seasonal fluctuations in business are the top cause of cash shortages, with 48% of small business owners reporting seasonality as a concern. Slow-paying customers are a challenge for 29% of small business owners, and the need to invest in inventory or supplies before getting paid for a job is a concern for 15% of owners.
When looking for solutions to make up for shortfalls in cash, 41% of business owners have used personal loans and 11% have turned to personal credit cards. Invoice financing has been used by 24% of owners, while 18% have utilized short-term business loans. Just 9% of small business owners said they have used a business line of credit to bridge gaps in funding.
What can small business owners do to more effectively manage these challenges?
Keep personal and business finances separate
It may seem faster and easier to take out a personal loan or use a personal credit card to fund your business. But ultimately, you’re putting your personal credit at risk—not to mention your personal assets. Instead, take the time to build a strong business credit score so you can rely on business financing when you do need it.
Invoice financing can speed up receipts.
Slow invoice payments are a growing problem for businesses of all sizes. Your customers are turning 30-day terms into 60- or 90-day payments; meanwhile, your suppliers aren’t quite as patient. With invoice financing solutions you can get paid now and let the financing company collect from your customers later, for a small agreed-upon fee.
A line of credit can bridge short-term needs
You should never have to miss a business opportunity because you don’t have supplies on hand, or because you can’t afford to wait to get paid when the job is finished. That’s when a business line of credit can help: It’s flexible, short-term financing that can help you complete a project or gear up for a job that won’t pay for a while.
Cash flow fears may be a fact of life for small business owners. But with careful management and the right financial tools, you can make sure that a short-term cash crunch doesn’t cost you long-term business opportunities.
Poll methodology: Between Sept. 2 and Sept. 6, 2016, Manta surveyed 1,099 small business owners via on-site poll. The margin of error is +/- 2.84 percentage points with a 95% confidence.
This article is sponsored by BlueVine, which provides small business owners with fast and simple invoice factoring with credit lines up to $500,000. BlueVine also provides a flexible business line of credit with credit lines up to $50,000, usually within 24 hours, with absolutely no paperwork.