Cash Flow Tips to Help Every Retail Small Business Grow  

Posted: December 26, 2018 


From evolving consumer trends to labor shortages and seasonal fluctuations, retail companies face unique challenges regardless of size. In fact, the industry has one of the highest concentrations of small businesses. According to the National Retail Foundation, the vast majority – more than 98 percent – of retail workers work for small businesses with fewer than 50 employees.


For these smaller companies, getting access to capital in order to grow their business, and managing cash flow is a necessity. The fourth quarter is an especially critical time of year. Nearly 75 percent of retailers report that the fourth-quarter is their most profitable time of year. At the same time, more than half (65 percent of online retailers and 60 percent of brick-and-mortar retailers) report their costs increasing by 25 percent on average. To curb common challenges, here are tips that can enhance cash flow.


Maximize Your Deductions to Minimize Taxes


Many small business owners are generally familiar with some of the small business tax deductions that can help you save money at tax time, but did you know about Section 179? This tax break for small businesses is intended to make it more affordable for small companies to buy business equipment, such as furniture, vehicles, computers and other tangible capital investments. Small businesses can deduct the full value of qualifying business equipment purchases up to $1,000,000 in the same tax year that the purchases are made. This alleviates the pain of depreciating (or deducting the amount in portions) on a year-by-year basis over the useful lifetime of the equipment. To take advantage of Section 179, consider your long-term equipment needs and consider making purchases before year-end to save on your taxes later.


Consider Your Funding Options


Since banks often require old bank statements and dated tax returns it can be challenging for business owners lacking long credit histories to get access to funding. On top of this, small businesses are oftentimes overlooked by banks favoring bigger companies seeking larger loans.


Many small business owners have begun using online lending platforms that look at their live data to approve funding. These innovations allow for wider and more varied types of business loans, faster access to working capital, and evaluation processes that consider a company’s current business performance instead of dated documents.


For example, despite having 10 years of industry experience, Trish Dill, the owner of Desert Signs in Phoenix, Arizona was turned down by a traditional bank for a small business loan. Through an online lending platform, Trish was able to get the funding she needed to buy the equipment that helped her operate her business more efficiently and take on larger projects. The short-term loan also allowed Desert Signs to expand its advertising and increase its customer base."

Read the full article online at Retail Minded.