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You got funded! 5 things to do first with your merchant cash advance

Congratulations! You just got funded with a merchant cash advance. Now it’s time to put that cash to work for your small business. Having cash in hand will certainly help make structural changes, win new customers, and grow your small business. That’s why it’s so important to stick with your business plan. To apply the cash you now have in hand to the project you needed it for in the first place.

Here are 5 things you can do today.

1. Spend the money wisely!

Yes, this is your mother telling you to make sure you spend your merchant cash advance on the project for which it was intended. Before you applied for your merchant cash advance, your business planning dictated cash was needed for a specific reason. If that was the plan all along, then stick with it. Do your best not to pivot and spend your merchant cash unwisely unless you and/or your partners see another opportunity this investment in your business will help return a profit. Yes, people do pivot, but it’s best to apply your merchant cash advance funds to the project you initially needed it for.

2016 U.S. Small Business Administration (SBA) business data statistical report said that 78 percent of U.S. businesses survive year one and only 50% of businesses make it to year 5! That’s why it’s critical to stay on track!

That means don’t spend your merchant cash advance on:

  • Fancy new office furniture
  • Pricey travel and entertainment expenses
  • Increasing advertising and marketing expenses
  • New clothing or automobiles
  • Try not to take cash out of the business

While it’s enticing to take your merchant cash advance and buy a plane ticket, ask yourself is it that trip really going to pay off a dividend?

Also, think about whether you should spend every dollar of working capital to having a rainy day fund.

2. Create a “must-have” list

You have essential expenses. Keep those expenses in check, so your costs do not increase and swallow funds from your merchant cash advance. Here’s a list of things you want to keep a firm grasp on:

  • Your lease or rent
  • Electricity, Water, and other fee-based city/town services
  • Legal services/advice
  • Accounting services/advice
  • Customer service and support

Keeping tabs on these costs and shaving them down where you can will help you invest your merchant cash advance in your business and ultimately pay down your merchant cash advance faster.

3. Evaluate technology costs

We all want what our friends have, but do we really need a new MacBook Pro when a comparable PC is far cheaper? It all depends on the need. For some, like graphic designer and web developers, a Mac is a trusted piece of equipment. But if you’re simply surfing the web and checking email, then a PC at a reduced cost could prove a better investment strategy.

  • Check your phone and software subscription plans to see if you can negotiate them down
  • Investigate if outsourcing your software development can save on employee expenses
  • Review how much you pay for transactions and see if you can find a better deal

4. Freeze your head count

Look at your staff costs and see where you can save. If you have hourly or p/t employees, can you take some hours over without harming your employees wages? Think about whether you should really bring on someone new and whether productivity will increase profits. If not, it may be wise to hold off on a new employee and do double-duty, to make sure that your not paying out more than the business can afford.

5. What’s your backup plan?

We’re not going to say it’s relatively easy to get a merchant cash advance. Money isn’t doled out like candy. There are rules and requirements. You should have good credit, your company should be in business at least 3 months, and you should have revenues of $100K. If you’ve gotten this far, that’s good. But, it’s still important to have a backup plan.

Maybe you have capital in the bank, but you want to sit on it for now and take a merchant cash advance and use it for a capital project. That way, you can at least have three to six months cash reserves while you put working capital in the form of a merchant cash advance to work for your business.

Whatever the reason, you should be sitting down with yourself and/or your partners to determine what your fall back is. Keep tabs on your business plan, your costs, your employees, and other expenses.

Remember, if you need working capital for your small business, apply today with Total Merchant Resources and get a funding answer in 24-48 hours.

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