Once you get a business cash advance, it's important to use it well.Business cash advances are best used to help a company grow so that the cost of the advance can be absorbed, and the business is better off afterward. Companies can move forward with the cash an advance provides, but must be wise about how they use the funds.
Spending on Non-Essentials
One major way business owners waste their money is by spending it on things they don't really need. Sure, that luxury company car looks great in the parking lot, but does it really bring in any new customers? Same thing with fancy office equipment or a bigger office than your business really needs. Staying lean frees up cash that may be needed for important priorities later on.
Non-essentials aren't always obvious when it comes to running your business. Personnel, supplies, and marketing costs may be other areas where money could be wasted. Do your print ads really bring in customers, or are they just considered part of the "cost of doing business"? Testing all spending to see if it helps your business could illustrate areas of waste.
Wasting Energy
For businesses with storefront or office locations, the cost of heating, cooling and lighting your space can be quite large. Investing in energy efficient equipment and lighting as well as sealing leaks can help keep your profits from literally slipping through the cracks.
Your staff should be trained to turn lights off and only run the HVAC system when needed. Of course, you don't want your staff to be uncomfortable, but common sense about power usage can save considerable resources.
Scaling Up Too Early
Growth is the ultimate goal of any business, but many businesses get ahead of themselves and spend a lot of unnecessary money on websites and logos to establish their brand before they have the customer base necessary to sustain that spending. A basic website and logo can be had for a few hundred dollars, and it will be apparent when an upgrade is needed, if ever.
Other ways business owners scale up when they don't need to are: hiring staff they can't afford instead of handling tasks on their own, or expanding their space without the customer base to justify it.
How to Tell Whether Waste is Occurring
Some spending seems wasteful but is actually justified and necessary. How does a business owner know whether an expense is wasteful or necessary? One important way to decide is by considering the ROI, or return on investment, of items you spend money on. Another way to think about ROI is to ask yourself whether the item you're spending money on helps the business increase profit.
It's important to consider ROI when deciding how to spend a business cash advance to ensure that your company continues to grow. Any expenditure that doesn't generate a return which covers the cost of the advance may be a wasteful use of funds and could put your business further behind.
In many cases small business owners lack the credit or collateral to access the money needed to remain flexible. Quikstone Capital Solutions provides fast cash for businesses. A merchant cash advance from Quikstone Capital Solutions is a business loan alternative that can help your business thrive and prosper, whether you need cash to buy equipment, cash to renovate or expand, cash to purchase inventory, cash to advertise or cash for emergencies. Quikstone Capital Solutions can help provide you with the business capital you need.
