7 Ways To Maximize Your Business ROI with a Merchant Cash Advance

Posted by Karen Erdelac on May 16, 2015

 

cash_advanceAre you familiar with the words “return on investment”?  You most likely are in some form or another. These words can sound intimidating but the truth is you already understand this concept as a business owner. The day that you dreamed up the creation of your business and made the decision to get it started showed your interest in maximizing the return on your investment.  Simply put unless you are a non-profit, you are in business to make money.  You need to use your cash flow for routine items such as payroll, utilities, accounting fees, advertising, insurance, office supplies, and travel expenses. With all of these expenditures (and this is just a partial list!), how do you make sure that you are getting the most profit from your business?  After you pay accounts payable each month, how much money is left over to purchase new equipment, remodel, or hire a professional who can revamp your business plan? 

Want to Analyze Your Return on Investment?

An article from The Business Insider provides a practical and easy to follow method to determine the return on investment for many small businesses who have inconsistent cash flow.  Businesses such as liquor stores, auto repair shops and restaurants may find it difficult to analyze their figures, since they may change drastically year after year.  So the proper way to calculate their return is using the "cash flow method". Here's how you do it.

  • Get a spreadsheet, excel will do.
  • Lay out along a single row a number of years. (They suggest 10 years)
  • In the first year show the total investment required as a negative number (because the investors are sending their money to you).
  • In the first through tenth years, show the returns to the investors (after your share). This should be a positive number.
  • Then add those two rows together to get a "net cash flow" number.
  • Sum up the totals of all ten years to get total money in, total money back, and net profit.
  • Then calculate two numbers. The "multiple" is the total money back divided by the total money in. And then using the "IRR" function, calculate an annual return number.

Sounds easy enough, right?  You can also consult your accountant for assistance with this calculation.

ROIAnalyze the Return on Investment from a Merchant Cash Advance

To effectively analyze the return on investment that a merchant cash advance is expected to yield, you just need:

  • The total cost of the cash advance
  • The additional weekly revenue that you anticipate to earn
  • Your net revenue

Once you have these figures, you can decide how to best make your business grow.  What types of purchases or activities will likely generate the greatest increase in additional weekly revenue?  How will you increase the foot traffic of your customers, increase the amount that they spend, and make sure that they keep coming back?  While these strategies depend on the nature of your businesses, the need for capital from a merchant cash advance is essential.

Don't let a lack of funding keep you from realizing business success. Contact Quikstone Capital Solutions today to find out if a merchant cash advance can help you move forward in your goals. 

 

Schedule a FREE ROI Consultation

Topics: Funding Your Business, Growing Your Business