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Seasonal Cash Flow Issue #1 That Membership-Based Businesses Experience (and What To Do About It)
Post Series: Seasonal Cash Flow Issues

Last week, we outlined a few of the most common signs & symptoms that your membership-based business is suffering from seasonal cash flow issues that if left unresolved, could seriously hinder your business’s ability to grow. 

This week, we’re focusing on #1 of the 5 most common, seasonal cash flow issues that membership-based businesses, such as gyms and yoga studios, experience and what you can do to resolve it. 

Cash Flow Issue #1: Failing to Forecast and Running Out of Money

According to Entrepreneur’s article outlining 4 Tips for Managing Cash Flow in a Seasonal Business, a 2017 Well Fargo Survey revealed that nearly half of all small businesses experience cash flow hiccups due to unexpected seasonal revenue fluctuations. Money comes in and your business seems to be doing very well on paper, but then you run out of sufficient funds mid-month. What the heck happened?

It’s easy to confuse revenue with profit, but oftentimes, a peak sales cycle also includes increases in variable costs: from replenishing stock and paying staff overtime, to paying unexpected insurance renewals and end of month taxes. It’s easy to get excited about an uptick in revenue and lose site of how much profit your business is actually making. 

What To Do About It:

Stop running your business based on month-to-month decisions. It’s time to take control of your business’s cash flow by getting more formal about tracking your finances. 

Take the time to create a twelve-month cash flow forecast that takes into account seasonal costs and revenue fluctuations. Begin doing this immediately! Open up a spreadsheet and start by adding the next three months and outlining all of your fixed and variable expenses as well as your revenue forecasts. 

This article explains how to get started and Futurpreneur Canada offers a free template to help get you going on your forecast. Depending on what you’re already using to track expenses, payables and receivables, many cloud-based accounting applications include a forecasting feature, too. 

Whichever method you prefer using, commit to it and revisit your forecast at the end of each month, adding a new month to your spreadsheet so that your forecast is always up to date. 

Ready For the Next Step?

Visit our blog next week for more cash flow issues and solutions, including Cash Flow Issue #2: Being Overly Optimistic About Your Projections and Pricing.

Need Cash Flow Help Now? 

Is your business feeling stuck in a situation that only an immediate influx of money can resolve? 

The problem with bank loans and lines of credit:

Applying for a business loan from the bank can take weeks, and many small business requests aren’t ever approved. Banks are typically only interested in substantial and long-term loan requests by business owners who have sufficient liquidable assets for securing the debt.

Considering that many small business owners are busy wearing several hats in their business, they don’t have the time to go through meetings with banks and potential lenders. When a financial emergency arises, time is of the essence and they need help, fast! 

And considering that many small business owners, already invested their own personal assets and savings in launching their business, they need a lender that considers their situation and offers loan amounts and repayment terms that are tailored to their unique requirements. 

Company Capital Can Help

While your business may be counting on increased sales this quarter, keep in mind that the holiday rush is also a time when businesses experience cash flow issues due to poor prior forecasting or lack of operating capital. Small business owners come to us for this very reason, seeking immediate financial support through one of our short term business loans. 

100% Canadian owned, Company Capital offers small business loan options that are based on your business’s historical sales performance. 

At Company Capital, you can speak with real humans at our office who will listen to your situation, and guide you through a fast and simple application process. 

Borrowing from Company Capital is a heck of a lot faster and more convenient than the process involved when borrowing from banks.

It takes as little as 3 minutes to apply for a loan from us online, via phone or email. Over 90% of applicants are approved for our Term Loans, receiving funds within 1-2 days. 

Actual Clients, Actual Results

Take a look at what other local small business owners have to say about us and how we’ve helped them.

Choose The Right Business Loan For Your Situation

Find out which loan option is right for you, take a look at how easy it is to apply, or give us a call at 1 (877) 595 2346 to learn more. We’re proud to support small local businesses and serve as trusted advisors in helping you grow your business.

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