How Fast Access to Capital Changes Everything for Growing Companies
Speed matters in business. Not the kind that induces chaos, but the kind that allows companies to make use of opportunities that come their way. The difference of days or weeks between funding options and conditions is often what makes and breaks fast-growing companies.
Most entrepreneurs know all too well what this kind of pressure feels like. Think of the times when they received a bulk order and had to jump at it. When a prime piece of real estate became available at an opportunity price. Or when a competitor did something silly that helped them compete better than they thought possible. These moments, when companies have the opportunity to change the trajectory of their business, often only come around every few years. With immediate access to working capital, those rare opportunities are the difference between dream and reality.
Where Timing Creates a Distinct Edge
Traditional funding options are almost always out of sync with reality. Applications need to be assessed. Underwriting takes weeks. Cash moves from one department to the other before it even reaches someone who can do anything with it. Those fleeting moments of potential for these fast-growing companies? Gone.
Fast-growing companies work on a different clock. A supplier has a flash sale but only for today. They can put in an order for bulk stock that will be arriving soon at a discount from the supplier. They’ve heard about some equipment that they might find invaluable but only at this once-in-a-lifetime price. Time is of the essence.
Companies that can take advantage of speed are no longer just another company that works on referrals due to their track record of following through on their promises. The company gets a reputation for making and keeping its promises. For entrepreneurs looking for access to working capital without wasting time queueing up at a bank, options like the ability to Apply For A Merchant Cash Advance mean they can get on with business and stop worrying about cash.
The Cash Flow Quandary All Companies Face
Here’s the shocking truth all entrepreneurs have to learn eventually: being profitable and having liquidity are two separate issues. A company can be profitable on paper but struggle to pay its employees if its clients take their time paying their invoices.
This puts an immense amount of pressure on the fast-growth company. While they rely on other companies paying their invoices in a timely manner, they have employees, suppliers, and numerous other operational costs they have to cope with on a day-to-day basis. They don’t have control over how quickly clients can pay. Some companies have 30 days to pay an invoice. Others might extend it to 60 or even 90.
With fast access to cash, companies no longer have to suffer through cash flow problems. They don’t have to scramble when they hear about an opportunity for a new client because their numbers don’t add up. They can focus on taking advantage of opportunities and assessing how to move forward instead of worrying about whether they can pay their expenses on time.
Client Growth Windows That Come And Go In The Blink of An Eye
The window of opportunity that fast-growth companies have to take advantage of is no longer than that of other companies. Hiring new clients shows entrepreneurs the same foot-in-the-door urgency as it does for other companies.
A potential new partner has left their old job and is looking for a great opportunity, but they can’t wait forever. A competitor is in free fall and looking to sell. Now is the time to buy other competing companies. Marketing strategies have just started showing a return on investment, and the company needs to strike while the iron is hot and double down on their efforts.
Fast access to cash means companies can consider opportunities without factoring in how long it will take for money to enter the door. Unlike making decisions on the fly, companies don’t make these calls rashly, but with their eyes trained on the future.
Confidence With Day-to-Day Operations
There’s also another aspect to this that deals more with the mindset of those making business decisions.
Companies that have fast access to cash operate with a different kind of confidence than when they continuously work with an illogical financial model that forces them to make compromises on things that should be non-negotiable.
You can see this confidence reflected in a few decisions:
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The owner of the firm negotiating the terms of a new deal with a supplier is no longer sweating them and trying to get the best deal available because they aren’t desperate.
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They have a buffer to deal with a situation arising from a dissatisfied client without having to panic and come up with a solution before they breathe again.
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They invest in efforts that optimize their business instead of continuously looking for the bare minimum expense so they can make it to the next round of funding.
All these tiny shifts, compounded over years, create something significant. Companies become more sophisticated and effective. Confidence shapes every decision they make, from hiring another set of hands to help them to exploring every avenue that may lead to further funding.
The Unfortunate Necessity of Managed Capitalization
Companies operate in cycles of income and expense. Restaurants know what time of the year they need to stock up and prepare for their customers. Construction firms know when winter will be slow. Companies that depend on tourism know how much cash flow is necessary before the influx of customers during peak seasons.
None of these cycles are toxic for companies. Fast access to cash can help manage and smooth over the anticipated rhythms every entrepreneur who has been in the game for a few years recognizes and anticipates.
Companies that survive these cycles are not necessarily as good as their competitors. These companies are better capitalized than their competitors at critical points in time.
Building Incremental Improvements Over Time
When it comes down to it, fast access to cash isn’t just about accessing it once when a company requires funding in an emergency situation. It’s about bridging the gap caused by funding bottlenecks that keep fast-growing companies from working on their long-term vision and allow companies to succeed over time.
Companies build momentum with cash.
They get used to negotiating with suppliers over time instead of rushing to suppliers and trying to haggle favorable terms unsuccessfully. They accumulate clients who repeat business because they have integrated their firm into their supplier network. They reap the benefits of their mistakes and create practices that work for them and not other companies.
They continue to invest in themselves and their offerings instead of worrying about cash and how to make it until their next stroke of luck.
Funding has changed fundamentally over the last decade. Entrepreneurs have options available to them today that weren’t ever possible previously. Knowing what these options are and having them available at their disposal before they find themselves desperate for funding gives fast-growing firms of all types and sizes the ability to operate without concern for where they can find access to cash quickly and how they can get back to the business of building their firms. This has made all the difference when it comes time to burst through ceilings limiting their growth potential.