If a business owner is skeptical about taking out any kind of business loan, it could just be because of a misguided belief in a business myth. Some business myths are not just limited to loans. Here’s one such myth:
‘Any business that delivers strong profits or revenue have no problems related to cash flow’
This means that if faced with a financial problem, a successful business should be able to deal with it without requiring any external financial assistance.
Fact: Some businesses are prone to cash flow fluctuations irrespective of how much revenue it generates, especially during the busier periods. In such scenarios, the need for effective funding solutions that double up as constant cash management tools is essential.
Spas and beauty salons especially can really benefit from a funding option such as a business cash advance and here’s why:
A Number Of Clients Pay In Advance
Any business that generates considerable revenue from credit card and/or debit card transactions should consider business cash advance as a great funding option.
The reality when operating in your industry is that you don’t have steady cash flow the year round, but what you do have is a steady stream of clients that are very inclined towards paying in advance. This means that you are in a position to predict your immediate business future.
By applying for a merchant cash advance, you will be able to secure funding to the tune of your average revenue through credit card and debit card transactions within a three month period.
This means that during the busy season, when you are generating strong revenues, you can book as many clients as possible for the ensuing months. You don’t have to make any repayments till credit or debit card transactions are processed on a pre-agreed date.
A Lot Of Working Capital Is Tied Up In Inventory
Most clients of business cash advances are heavily reliant on disposable retail merchandise and supplies. For a long time now, beauty salons have been coaxed to sell branded merchandise to create additional revenue streams.
Substantial inventory orders are to be expected in the event of holiday promotions or new releases. But, the main objective of generating additional revenue is so that you can utilize it to manage cash flow, operations or grow your business further.
By accessing business cash advance you get a chance to substantially grow your business without having to secure some kind of additional funding.
Certain Accounts Must Go Untouched
It is a common occurrence for a beauty salon to rack up debt or acquire bad credit. Monthly business expenses quite often exceed the amount of revenue generated, while profit margins also fluctuate.
In such situations, you might feel very tempted to divert some of your operational funding or reserve funds to offset some of the losses you have incurred. Losses could be caused due to significant semi-annual or quarterly payments like insurance or taxes.
It can prove to be a very big and costly risk if you don’t have any funds set aside to meet for these payments, especially considering that it might give you the impression that you can access extra funds when in reality you can’t.
Cash advances for your business can ensure that you don’t tap into your reserve money or your operational funding, which is very essential for small businesses as they are usually faced with financial emergencies like funding a new piece of equipment. You can also use the funding to pay off other debts or liabilities while you use your business revenue to deal with your cash flow expenses.
Majority of spas and salons are owned by female entrepreneurs and it is very possible that they start out with lesser working capital than most other men-owned businesses. This financial imbalance means that female business owners are sometimes bigger candidates of acquiring bad credit even as they try to navigate through routine financial hurdles.
Business cash advance offers female entrepreneurs an equal chance of raising the required working capital on convenient terms. This will give them a better chance to capitalize on their business ingenuity and grow their business to great heights without being encumbered by a plethora of financial problems.