Assistance For Small Businesses

Running a small business isn’t easy and, if yours is anything like mine, then liquidity is often the problem. My business takes a fair amount of capital upfront, invested in products and some equipment, leaving very little for running costs or, you know, food. The problem arises when you’re overinvested in capital or there is a delay in a repayment from a customer (don’t even ask me about the $110 that could have made all the difference in March 2011), you can be forced to make some tough financial decisions.

Before selling equipment, using up a personal emergency fund or declaring to your family en masse that you can’t do it anymore, look at some of these options for assistance. Inspired by an article on AFR Investor.

 

Save An Emergency Fund

Before we get to this point, the best possible thing we can do for our small businesses is save for exactly that kind of rainy day scenario. That $110 in March 2011 would never have been such a problem (and I’m talking using my debit card to eat one apple pie from Maccas because that was all the money I had left in the world) if I had a back-up. As in our personal lives, it’s essential that we have a cash emergency fund for our small business, and essential that we only use it for a genuine emergency.

Micro Loans

Worldwide, micro loans have been discovered to be an incredibly effective tool, both for lenders and borrowers. It recognises the essential role for a small loan in making a big difference to the running of a business. NAB and the Commonweath Bank both provide them, for small businesses with less than 5 employees. Loans are between $5,000 and $20,000 and have a 90 day interest-free period.

You might be tempted to think you can pay it all back in 90 days, but be sure to have a contingency plan for repayments. The banks also provide business counselling for the ninety days, which is a fantastic assistance. It also shows a great awareness of the best means of protecting their investment, which is to see your business succeed.

Cash Advances

I am typically fairly wary of cash advances, often hiked with high interest and impossible conditions. Yet, there is sometimes a cause for them. Be sure, and I can’t emphasise this enough, that you are definitely able to pay it back quickly before getting sucked into a debt cycle. AFR mentions Cash Doctors, which doesn’t charge interest but charges an account management fee and drawdown fee, which works out at about 20% interest.

Certainly, if your only issue is immediate cash and you can guarantee repayment in a certain period, it can be considered.

Counselling

Sometimes our issue is not financial, but structure. The finances might be a symptom, but the underlying cause is a structural problem. For this, there are resources galore. Apply for some government grants that include mentoring. They also provide a database of advisors and events in your local area at www.business.gov.au, a significant help to anyone starting or running a small business.