If you own or manage a business, you know that certain seasons produce more customer demand than others. In some instances, a month or even a few weeks can present the opportunity to make an enormous sum of money. But your business will not be able to take advantage of seasonal business trends if it lacks the necessary working capital.
Fixed Capital vs. Working Capital
Fixed capital is money dedicated to long-term investments like warehouse space, office space and machinery.
Working capital is meant to fund a business’ daily operations like inventory and various overhead expenses. A business’ working capital is calculated by subtracting its current liabilities from its current assets. Unfortunately, many businesses have little, if any, working capital at their disposal. As outlined below,
a lack of capital presents a massive problem in the event of a spike in seasonal demand.
Working Capital to Meet Seasonal Demands
Consider a sporting goods store that operates in a couple of small towns outside of a major city. When little league baseball season starts up in the spring, the business has the opportunity to sell tens of thousands of dollars worth of baseball bats, gloves, cleats and other related equipment. Unfortunately, the store endured a brutal winter of low sales and lacks the working capital necessary to stock up on baseball equipment.
This is the perfect scenario for the business to obtain a working capital loan. A quick influx of cash is
exactly what is necessary for the sporting goods store to purchase baseball equipment that will fly off its shelves in the next couple of months. If the store can obtain a working capital loan, it will keep its doors open. The store will sell an abundance of baseball equipment, pay back the loan and use the remaining proceeds to hire more workers, replenish inventory or expand the business. This is the magic of seasonal business trends and working capital loans.
The Challenge of Maintaining Adequate Inventory
Sustaining sufficient inventory is easier said than done. No one can predict the future. Sure, a business owner can anticipate a seasonal uptick in customer demand for particular products with some accuracy. Yet all sorts of other variables can preclude his or her ability to sustain ample inventory. Perhaps
a machine breaks down or employees go on strike. Or, maybe inventory costs unexpectedly rise. Any number of potential scenarios can arise that prevent a business from maintaining sufficient inventory to meet a seasonal upswing in consumer demand. This is precisely why so many business owners and managers are willing to forge alliances with financiers who provide timely working capital loans.
MY Company Funding is Here to Help
If your business needs an injection of cash to meet a spike in consumer demand, consider the merit of MY Company Funding’s working capital loans. These short-term loans might be exactly what you need to turn a quick profit and propel your business to new heights.
Contact us today to find out more about how our business financing can help your company reach its potential.
