How to Determine If Your Small Business Needs Working Capital

How to Determine If Your Small Business Needs Working Capital

Reacting to signs that indicate your small business is running short of working capital enables you to remain at full strength and ready to seize opportunities as they arise. Watch for these warnings that signal a need for additional funds.

Inability to Respond to Customer Demand

If you have orders that you are unable to promptly fill or sales leads you cannot immediately take advantage of, you may need additional working capital. An infusion of funds can help you meet the need by employing more personnel, expanding facilities, purchasing inventory or improving customer service.

Inefficient Operations

A lack of working capital may be limiting your ability to upgrade your technology or equipment. This impedes productivity due to technical and mechanical breakdowns and subsequent repairs. New tools and equipment more than make up their costs in increased efficiency.

High-Interest Debt

Although sometimes small business owners have to initially finance their start-ups with high-interest loans or credit cards, these debts can take their toll over the long term. Additional working capital through lower-interest term loans or lines of credit can relieve the financial pressure and contribute to a healthier bottom line.

Insufficient Marketing

It takes working capital to keep your small business clearly visible to the public. Investments in marketing may include a direct campaign or the addition of more sales personnel. If you fail to maintain sufficient marketing, you risk falling behind your competitors.

Lost Expansion Opportunities

Additional working capital may be essential if you want to acquire product lines or companies to supplement your current range of products, or purchase a building or major piece of equipment that becomes available. You don’t want to miss out on important opportunities due to insufficient funds.

Taking action to ensure a sufficient amount of working capital is a key to growing your small business. Contact Flipside Capital for your working capital needs.