Most small businessmen ask one favorite question: How can I get more cash – and where can I get it from?

When you need money some of it can come from your own pocket. Even you know that it is likely to come from your own pocket- provided you have kept it liquid and accessible. Like liquid of ultra short bond funds. It is easy to borrow money ONLY when the lender can see how you will repay the same. The reason why it is easy for people in service to get loans from banks is that the bank can see how the money will be repaid.

Capital – is the bloodline of any business. You need it at the start and also when a business is running. Whether to launch a new product, to cut prices to hurt the competition, to buy equipment, to set up a new team to create a new market, to grow abroad – there is always a need for capital. It is not easy to get capital unless you have a grand plan of what you propose to do with the money.

Cash is again the life-blood of any activity. Whether it is running your own house or running a big business, cash is important to buy things that are essential. For a small house you might need to have just Rs. 5k lying in your house, but the equivalent of Rs. 5k for a business run in 120 countries could be more than US $ 1 billion !! Remember the heart does a great job of making sure that the blood does not stay in the same place. In a business if the entrepreneur is not alert enough, it might stay in one place. Say you bought certain goods which are not selling. You sold to a customer who is not paying. You bought an equipment which you are not using. These are all examples of cash not moving fast enough. When you make too many such mistakes, you run out of cash – especially if the profits flowing in are not enough to “hide” your mis-adventures. It is the entrepreneurs duty to make sure that the blood (cash) is moving around, and the pressure is right! What happens when your mistakes are greater than the profits? You run out of cash for the day to day activities. You do not have cash to buy the raw materials, pay salary, pay GST, -and you start looking for more cash. It’s a vicious cycle. Running out of cash is the WORST thing that can happen to a running business.

to be continued…