We just had a discussion in the member forum about being financially able to expand a growing cleaning business. One member commented that his business is growing but he's concerned about the lack of capital needed to fund the expansion.
For commercial cleaners in particular, this can be a real challenge as you get into larger sized buildings. There can be a significant equipment investment as well as large payroll runs as soon as you take over the new account. If you have your clients pay BEFORE service starts each month, it will help your cash flow immensly. But what if that is not quite enough?
Another member joined the discussion and suggested getting a line of credit. The original poster said it goes against all of his thinking because he despises debt. I do see where he's coming from, because we were lucky enough to be able to self-fund our growing cleaning business. We had a little help from our janitorial distributor in the beginning, who let us pay for equipment over 90 days if we needed a little extra time.
My response to our member who is averse to debt, was to suggest that he look at a line of credit in another way.
"Don't look at a line of credit as debt. Look at it as building credit and building a relationship with your banker.
We had a $30,000 line of credit that we didn't necessarily need. But every time we made an equipment purchase that was $2000 or over, we used it, even if we could afford to pay cash. We simply made the monthly payments until it was paid off. That helped our corporation establish its own credit - in case you ever really DO need it."
If you are struggling with how to fund the growth of your business, consider the three options suggested above. It just might make it a smoother road to growth!