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How to Determine Your Business’s Annual Funding Needs

With the fourth quarter quickly approaching, many business owners are beginning to plan for 2022, including their financial needs for the year. 

Your funding needs will differ depending on your business type and your operating cycle. By nature, some businesses need more cash readily available — whether that’s for inventory, accounts payable, etc. You know better than anyone how much capital you need on-hand any given season.

To fully understand your business’s unique annual funding needs, we encourage you to consider:
  • Ongoing expenses, like rent, utilities, salaries, benefits, inventory, etc.
  • One-time expenses, like repairs, equipment, fees, etc.

It’s better to calculate your business’s expenses over the course of a full year rather than for a single month — that way you are accounting for seasonality (revenue highs vs. revenue lows), one-off annual expenses, and more. 

Add up your ongoing and one-time expenses. Once you’ve determined the annual cost of these expenses, you’ll then need to estimate how much liquid you will likely have at your disposal in 2022.

Now calculate and project your liquid assets for the year.

 

Your liquid assets could include your checking account, savings accounts, accounts receivable, etc. Estimate how much starting liquid your business will have AND the amount of revenue you’re likely to generate each month of the year. It’s always a good idea to look to your historical averages for a more accurate estimate of your monthly revenue. If your business is relatively new, try researching market and industry averages for your region to come up with a realistic number.

A quick review of your projected liquid vs. annual expenses will show if you are likely to have a financial shortfall.

When completing this practice, many business owners realize that they are  projected to be at, near, or below $0. Having quick access to working capital is important for all businesses – it can help you cover regular business needs, purchase assets, expand your market share, and have wiggle room for unexpected emergencies

According to our recent survey, 94% of small business owners indicate that it is very important to have emergency funds for their business, yet only 35% are able to handle a major unexpected expense at the moment. This is where we come in.

Elevate Funding is a direct funder that specializes in Merchant Cash Advances (MCAs). An MCA is not a loan – it’s simply a way to get access to your future sales [liquid] immediately. The MCA application process is simple and quick, and we are able to fund companies in as little as 24 hours. Plus, there are no restrictions on how you use the funds.

More perks? We don’t check credit, charge outrageous fees, or require collateral.

If you need funding and wish to speak to someone now, please call us at 888-382-3945 or click here to send us an inquiry. One of our teammates will get back to you as soon as they are available.