Starting a business doesn’t just mean generating revenue; securing the same with various business insurance plans is also essential. These can range from general liability insurance, commercial insurance, natural disaster insurance like fire, earthquakes, etc., worker compensation insurance, property insurance, and many more.
Even if you are generating good revenue, all this hard work will come to a halt with any of the above-mentioned unexpected events.
According to a recent article published by Forbes, “There are 75% of small businesses who don’t have a disaster plan for their business, 52% of business owners state that they will require a month to recover”. If you don’t have the ability to recover from a potential disaster in those months, then you should get a safety net in the form of a business credit line to make your business survive.
Preparing for unexpected working capital shortage
A shortage of cash flow is something that a lot of business owners don’t think of when starting a business. This could happen for any reason, like seasonality, a large influx of orders leading to cash flow issues, late or missed client payments, unexpected theft with an employee that requires time-consuming litigation, etc. These are some of the factors that can hamper your working capital and the cash you have.
This could result in not having enough working capital to cover the payroll, funds required for new time deals on equipment, goods for new clients, or any type of marketing campaign that will help you boost your business during the peak season. If you miss a chance to get an order from a large client or are unable to pay the payroll, this could result in expensive lawsuits, which can have a serious impact on your business.
As an acute business owner, you’re already planning strategically. The more risks you can minimize in your daily operations, the better your chances of successโand avoiding becoming just another statistic. One essential part of this planning is to have a solid disaster plan in place.
A business line of credit as a safety net
When you open a business credit line, you get access to funds that can be used in an emergency situation, which is a huge step towards de-risking the activities of your business.
The business credit line allows you to access extra capital required during these emergencies.
Things to prevent from extra working capital
Following are some of the things that you can prevent from working capital that you get from the business credit line,
- Expensive lawsuits due to missed payroll for employees
- Lost income from failing to fulfill major client orders
- Missed opportunities on valuable deals for equipment and transportation that could help grow your business
- Losing out on discounted advertising options during peak seasons or high-demand periods
You can perceive this as free insurance for your business, which could help in the worst-case scenarios. Have you given a thought to why you havenโt secured a business credit line?
There can be multiple reasons, such as you donโt require it at the moment, your concern about not getting approved from the same, the paper, or time consumption. However, once you are through all these factors, getting a business credit line will always help you.
Right time to secure a business credit line
If you havenโt thought of getting a business credit line as of now, then this would be the right time to get your safety net. Itโs always better to get a business credit line when you donโt require cash immediately.
Itโs better to apply for a business credit line when your business is working smoothly, the cash flow is good, and you have a lot of clients, as this will help you in times of struggle.
A line of credit wonโt cost you anything unless you draw funds from it. Thereโs no credit check needed to get started, and if approved, you only pay when you use it. Thereโs no obligation to use the funds immediatelyโyou can keep them as a safety net for your business or as a resource to support growth in the coming year.
Conclusion
Securing a business credit line is essential in safeguarding your business against unforeseen challenges. Whether facing natural disasters, cash flow shortages, or unexpected expenses, having access to extra capital provides peace of mind and financial stability.
Even if you donโt currently need it, establishing a line of credit while your business is thriving can prepare you for potential downturns.
With minimal cost unless utilized, this flexible resource serves as both a safety net in emergencies and a tool for seizing growth opportunities. Protect your hard workโconsider setting up a business credit line today.
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