A major hurdle that many businesses can encounter is finding that they do not have the liquidity to cover any debts they may have arisen. Making sure that your company has ample liquidity is important because of the freedom it enables. Not only does the extra cash on hand make it possible to cover any unforeseen debts that may arise, but it also allows a business the ability to reinvest in things such as new technology, equipment or any type of expansion.
Problems can arise when you realize you do not have the ability to cover these expenses. Too many entrepreneurs aren’t sure how to go about increasing the pool of cash available to use. The following are some of the best ways to increase the liquidity of your company.
- Stock Loans
For businesses that do not have a large number of shareholders, a stock loan can be a quick and easy way to increase liquidity. There are several companies online that offer these types of loans. A stock loan is when a lender will loan a business operating capital using the value of the company stock as the security. Once the terms of the loan and interest have been satisfied, the securitized amount of stock is returned to the original holder.
Getting a stock loan from easystockloans.com or other another lender is usually as simple as filling out the paperwork and speaking with the lender over the phone. Most times, the length of these loans is in 12-month increments, and they can be for amounts as large as seven figures.
This type of loan can be a great way for businesses looking to scale up in size to acquire the capital required to keep up with production and with terms that shouldn’t handcuff the company from being able to operate as usual.
- Microloans
For entrepreneurs who have a business that is smaller in size yet needs capital to grow, a micro loan may be the way to go. Microloans are available through several different outlets. Financial businesses like PayPal have programs that can provide small loans for amounts as small as a couple hundred dollars to loans as large as $15,000-20,000. These can be used in a manner that will benefit you the most, such as inventory expansion.
The U.S. Small Business Administration also offers microloans as large as $50,000 to qualified candidates. Due to these loans being typically made by local non-profit or community-based organizations, repayment isn’t very difficult due to the favorable terms of the loan.
Microloans are the foundation of many small businesses in other countries and have helped boost the economy of many emerging countries.
- Reducing Overhead
Probably the most time-tested and effective ways to increase liquidity is by reducing overhead. Operating expenses or overhead are comprised of many things that do not turn a profit or only indirectly lead to one. Some of the most common overhead costs are utilities, rent, insurance and other costs like license fees or memberships to industry associations.
Many of these expenses can easily be reduced. Some examples would be negotiating a better rate for your long-term insurance policies. Another option is to be frugal by cutting down on operating costs like electricity by using automatic thermostats to better regulate the power and lower utility costs. It is also important to pay attention to any theft of office supplies because the loss from these and the costs of replacement can quickly add up.
Keeping a business liquid is one of the most important things owners must do to ensure they have ample operating capital. If you don’t have enough liquidity, then unexpected costs and the inability to make moves when opportunity arises can set a company back from being as successful as it could possibly be.
