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How to Reduce Stress in 2015 By Changing Your Financial Goals

As a small business owner, you’re in the race against your cash flow, inventory management, and sales. Let’s be realistic — every year you’re bound to hit a rough patch.

Now that you’re feeling refreshed from the holidays, ask yourself, “What can you do differently this year to reduce stress?”

While you probably won’t avoid the all-nighters, you can proactively manage these times from a financial perspective. That way, you’ll save more energy for the unpredictable challenges that come your way, and be able to take on business opportunities more aggressively.

Changing The Way You Think About Funding in 2015

1. Secure funding options for a rainy day, but don’t pay unnecessary interest for money to sit in the bank.

With the rise in alternative funding options, you don’t have to take out a long term loan and commit yourself to years of interest in order to ensure a source of capital to fall back on.

Take some time this January to chart out your available balance at alternative lenders, like Behalf. By incorporating this data into your annual planning, you’ll be more likely to proactively tap into these sources of capital. When stressful times hit, you probably won’t have time to start researching.

Imagine that you’re choosing between leasing a bigger car for the entire year, or renting a bigger car to go on trips for 4 weekends a year. You do the math. If you’re not planning to use the car every day, then you don’t need to pay for it to sit in your garage. Just figure out your rental options and wait until you need it.

What are your options for extra working capital? You could pay an annual rate on a one year business loan that sits in the bank, so that you feel empowered with extra cash flow. Or, you could do your research on alternative sources of short-term capital, and only pay interest on money when you’re ready to use it.

2. Plan to use your rainy day funds — that’s why they’re there.

When using your business’s rainy day funds you shouldn’t feel like you’re turning your piggy bank over to count your last pennies. Once you stop thinking about rainy day funds this way, and you’ll feel more at ease about using them.

Your credit balances at alternative lenders can help in two very important ways: prevent you from accumulating too much debt, and enable you to take on new projects that you’d otherwise avoid.

Remember the question of the year long lease versus the short-term car rental? Now, in January of 2015, you need to convince yourself to actually rent the car on those weekends, without feeling like you’re spending a lot of money. Easier said than done.

The same scenario applies to small business owners. If you want to avoid taking on a year long business loan, and go with shorter-term credit, you need to prepare yourself to actually use these funds when the time comes. Unless you do the math now, you could risk slowing down your business growth later in the year.

3. Use alternative funding to take on extra projects — not just to tide you over during the tough periods.

In the previous generation, business owners may have set up business budgets using envelope financing, or allocating different “envelopes” of cash to different expenses, and only using what’s there in the envelope. That way, they’d ensure that they stayed on top of their books.

But, modern day business owners may actually benefit from growing their revenue out of funds that aren’t in any of those envelopes. Today’s entrepreneurs know how to take advantage of opportunities to bring in revenue that will outperform the cost of capital, and then pay back the interest with the new profits.

By learning how to check your available funding on various platforms at the beginning of the year, you’ll be able to jump on these opportunities more often.

 4. Change your mindset about working capital. Lower levels of working capital may be good for your business.

Now that you understand the benefits of using extra short-term capital, you can actually lower your level of working capital on a more consistent basis.

Big businesses, like GE, Dell and Cisco have been working towards lower levels of working capital for years now. They push off supplier payments until they start earning the revenue from the supplies, and then use the revenue to pay off the suppliers.

Obviously, you don’t have the same negotiating power as Dell or Cisco. But, with alternative sources of capital you can get your suppliers paid on time, while you push off your repayment, thus accomplishing the same benefit of lower working capital. In essence, you’re bringing your own small business terms with you, instead of negotiating for terms with each supplier.

5. Take advantage of short-term financing as an opportunity to build your business credit.

True, business owners need to tread carefully in the short-term financing space. But with new alternative financing options, small businesses can borrow responsible amounts of credit, pay back on time, and build up credit over as short as a few months. Do the math. Short-term financing carries a value-add to your company that longer term working capital loans take a while to reach.

Shai Feinberg

Contributor at Fundera
Shai is a Co-Founder and Vice President of Business Development at Behalf, a small business financing company. Behalf pays vendors upfront, so their small business customers can buy more and pay back on flexible terms. Read more small business financing tips at and follow @BehalfInc on Twitter and Facebook.

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