The Small Business Budget – Working Capital Tips for 2020

 In Business Tips, Small Business Funding

The new year is just around the corner and most business owners are already looking ahead to  2020. Planning a budget for the next business year can be a mind-boggling task fraught with economic uncertainty. This is especially true for 2020. Although the economy is on an upward trajectory, tariffs, political upheaval and the fear of global recession could potentially disrupt the budget a business owner sets for the upcoming year. Whether your plan for 2020 is to maintain your current level of business or you’re planning on expansion, these tips will help you create a small business budget that will keep you on track to achieve your goals. 

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Expect the Unexpected

Nothing will throw a wrench into a small business budget faster than an unexpected expense. Although an emergency fund may not seem like a priority, it is essential to help ensure that your business will weather an unforeseen expense such as a downturn in business or a natural disaster. Today’s technology has also opened small businesses up to cyber attacks which can be financially crippling. According to a 2019 Verizon report, 43% of cyber attacks target small businesses. 

Whether the result of a natural or technical disaster, it’s critical to get your business up and running as quickly as possible. According to FEMA, 90% of smaller businesses that don’t reopen within five days of a disaster will fail within a year. Incorporating an emergency fund into your budget can help prevent that from happening to your business. You can start an emergency fund or fortify an existing one by cutting costs wherever possible and diverting the savings into that fund. 

ROI Is Key

When planning your business investments for the upcoming year, take the time to thoroughly evaluate your options. While ROI is important throughout every stage of business, it becomes even more important when the potential for an economic downturn exists.

Marketing is a perfect example. Not all types of marketing are right for every business. Before going all-in on a specific type of marketing, make sure it is going to reach your target audience. If you’re considering social media marketing, do some research and see which platforms your audience use. Marketing to the wrong audience will provide very little ROI.

Expansion is another good example. While a second location may be your goal, you need to make certain the location you choose will provide a solid return on your investment. Is the new location in an area where people are interested in your products or services? Will a second location increase your customer base or just divide your current customer base? These questions and more will help you determine if a second location is a good investment. It’s important to do your homework before putting your hard-earned working capital into something that won’t provide a solid ROI.

Reduce Fixed-Cost Commitments

When planning a small business budget for the upcoming year, flexibility is important. While signing up for long-term property leases or software subscriptions provide small discounts, these commitments can severely limit your financial flexibility. In the event of a great business opportunity or a downturn in business, you may decide you want to invest that money elsewhere. Or maybe you can no longer afford the subscription.

In some cases, financial flexibility is worth a little added expense. Before making a long term commitment, consider the future. You may decide that you would prefer the ability to scale back on expenses if needed or divert capital to other business endeavors. 

Secure Funding Before It’s Necessary

Most business owners wait until they need small business funding before applying for it. The best time to apply is when you don’t need to. Besides the fact that obtaining funding will be easier while your cash flow is strong, building a strong payment history and relationship with your funding provider is equally beneficial.  Having a go-to source for additional capital when necessary is an important part of a small business budget. Also, by applying for funding when you’re not in dire need, you can take your time and find the funding solution that’s right for your business.

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Back-Up Your Small Business Budget

It’s not uncommon for even the most well thought out small business budget to occasionally be a little tight. That’s where CFG Merchant Solutions can help. We offer a variety of funding options that require minimal paperwork and once approved can provide a fast effective funding solution for your business. We can often even provide funding for businesses with less than perfect credit.  

Whether it’s a merchant cash advance, invoice factoring or any of our other funding options, we will guide you in choosing the perfect solution to supplement our small business budget. Our team brings to the table more than 60 years of institutional investment banking experience in the credit, commercial finance, and capital markets. Contact us or apply online today

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