Businesses rely on invoice financing, stock loans, supply chain finance, and other short term financing tools to help them keep cash flows stable in unstable business environments. Having access to these solutions is often key to a small business’ survival, and that of the people and businesses who depend on it. That does not mean, however, that alternative finance is limited to a purely reactive, financially stabilising role.
Keeping cash flow steady is a tough job. Not only are there unforeseen interruptions such as late payments, or surprise expenses to contend with, but also seasonal fluctuations in demand that can be very difficult to manage. Managing these issues efficiently can often make the difference between mere survival, and the boost you need to grow and establish yourself as a leader in your industry.
The turn of the 21st century brought a lot of changes to the business world, but the most significant so far has been the integration of advanced information technology into business. One of the most notable figures in that revolution has been Marc Benioff, the founder and CEO of Salesforce. During his career, he established himself as an early champion of cloud computing, and is credited today as the driving force behind the $17.5 billion dollar business.
As a business owner, the day you land your first big league client is always exciting. It feels like you’ve finally made it. The new contract might double or triple your revenues, and forces you to finally take the leap and scale up your business. Unfortunately, for many less experienced business owners, it’s only then that it finally becomes apparent that the real challenge is only beginning. Rapid growth is expensive and can make cash flow management much trickier than you’re used to.
There are a million things that can go wrong in a business at any one time. During a growth spurt, many of those issues become much more dangerous. Investing in growth places additional strain on a business’ budget, which leaves very little room for error. A lost investor, a late client payment, or simple budgeting problems can disrupt a business’ cash flow to the point where operations are interrupted.
Starting and running a small business is an incredible challenge in its own right. Entrepreneurs have a nearly laughably diverse range of responsibilities that they need to tend just to operate. However, entrepreneurs don’t go into business dreaming of mere survival. Success means growing, competing within their industry, and taking on much larger and better established competitors to become an industry leader.
While most entrepreneurs are limited to disrupting and advancing a single industry in marginal steps by their resources or interests, others are determined to push humanity forward as a whole. Some, like Elon Musk, aim to do this by simultaneously transforming multiple industries, while others, such as Boyan Slat and others with fewer resources, pursue more targeted projects with the aim of triggering global change. Arguably the greatest of these visionary super-entrepreneurs is Jeff Bezos, the founder of Amazon, and briefly the richest man in the world early in 2017 when his net worth broke $90 billion US dollars.
In recent years, major hacking events from the heartbleed vulnerability in 2014, to the WannaCry ransomware attack earlier this year have highlighted the need for better cybersecurity. More than previous events, however, the recent Equifax data breach illustrates the extent of this problem, and the threat it represents to businesses all over the world.
It’s common knowledge that business owners need to cultivate a good relationship with their bank if they hope to succeed in the long term. What many entrepreneurs aren’t aware of, and need to know, is that they might well need another financial relationship to secure their competitive edge. In cash flow situations that banks aren’t ideally equipped to handle for their clients, they’ll often refer business owners to an alternative financial institution, like Fifo Capital.
Cash flow problems are by far the most common cause of small business failure. Avoiding and managing those issues is one of the most important responsibilities that entrepreneurs have, and the one that they’re often most poorly prepared to deal with. Careful accounting and strategic financial planning are critical to any business’ survival, but there are issues that even this won’t help to address.