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Signs & Symptoms Your Membership-Based Business Is Suffering From Seasonal Cash Flow Challenges (and Whether A Business Loan Would Help)
For a first-hand account about how other seasonal small businesses manage cash flow read our interview with Namaskar Yoga on how they’ve benefited from the help of small business loans. 

Representing the biggest potential sales quarter for retailers, the end of the calendar year also represents the best revenue-generating opportunity for several membership-based businesses, too. 

While we don’t intend to dampen your enthusiasm with our dose of realism, we do want you to be adequately prepared and profitable, because this also tends to be the time of year when many membership-based businesses rely on emergency financial relief through short-term business loans. 

What’s Considered a Membership-Based Business?

Membership-based businesses can vary and include anything from a cloud-based software as a service company, or subscription-based news or magazine publisher, to a landscaping company, personal trainer or any business that collects an upfront monthly fee for service.

Two common, membership-based businesses that especially rely on generating a significant portion of their annual revenue between October and December (and early January) are gyms and yoga studios. 

While the membership-based business model comes with a lot of perks, such as the ability to forecast receivables based on active membership numbers, it comes with its own set of cash flow challenges as well, which are further exacerbated during seasonal highs and lows. 

Ignoring the vitality of your business’s cash flow is the proverbial equivalent of driving without a fuel gauge.

Cash flow steers your business towards either success or failure, and is the driving life force of every business. This is why it’s absolutely vital that every business owner (regardless of business size, type and tenure), establish at least a basic financial literacy in how to manage cash flow.

That said, very few business owners are financially savvy. More often than not, small businesses are launched because the owners are personally great at making a product or delivering a service, which doesn’t automatically make them equipped or experienced at running or growing a business. Fortunately, there’s hope!

The first step is to identify whether or not your business is showing signs of suffering from a cash flow related issue that needs resolving.

Signs & Symptoms of Seasonal Cash Flow Issues

Running out of money mid-month:

Perhaps the month started off strong and sales seemed to be good; however, by mid-month, you’re finding yourself unable to order new stock and equipment.

Not enough working capital to respond to emergencies or take advantage of opportunities:

If an excellent, time-limited advertising opportunity came up, would you be in a position to take advantage of it? What if something needed immediate repair? Could you afford to hire new staff if your business suddenly got busier than usual?

Aging accounts payable: 

Are you finding yourself paying your business debts later than usual? Are you late paying your bills only some months due to members not paying you on time? 

Can’t afford to order more merchandise: 

Perhaps September was slow, and you know you need to order more merchandise or hire more staff in order to be prepared for a typically busy time of year for your industry. 

Equipment that’s been broken for longer than a month:

Are you unable to schedule equipment repairs because you don’t know when your business can afford to pay the bill?

Lots of active members, but little profit: 

Are you feeling defeated because, on paper, your business looks like it should be very profitable, but in reality, you feel as though you’re just barely keeping your business afloat?

Marketing isn’t working as well as expected:

Do you know what your business’s “batting average” is? Does your business receive interest from potential members? Do they convert to long-term members?

What Can You Do About It?

While the above only represents a few of the most common signs & symptoms of cash flow issues that membership-based businesses experience, if you find yourself running out of money, there’s a very good chance that your business has a cash flow issue that needs to be resolved in order for your business to grow and become profitable. 

The Second and Most Important Step

Review the most common, seasonal, cash flow issues that membership-based businesses experience, whether or not you might be experiencing them, too, and how to quickly resolve them in time to make the most of a potentially profitable season.

Every week this month, we’re going to outline each of the five most common seasonal cash flow challenges that membership-businesses like yours experience (and what you can do to effectively resolve them) as follows. 

The 5 Most Common Seasonal Cash Flow Challenges that Membership-Based Businesses Experience and How to Resolve Them

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

Cash Flow Issue #2: Being Overly Optimistic About Your Projections and Pricing

Cash Flow Issue #3: Not Competitively Capturing Seasonal Market Share

Cash Flow Issue #4: Lackadaisical Accounts Receivable

Cash Flow Issue #5: Not Saving Enough Net Working Capital to Execute on Ideas and Plans

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 winter season 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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