Working Capital Challenges and Your Small Business

Working Capital Challenges and Your Small Business
  • Opening Intro -

    Why is it so difficult for small businesses to raise capital?

    There are a number of reasons including an unproven business model, a sketchy business plan, a lack of personal capital, and the simple fact that a significant number of new businesses fail.


Indeed, after 10 years, most small businesses are gone — either they have been shut down or were merged into a new business.

To survive as a small business operator, you need sufficient working capital to start and maintain your business. Obtaining funds can be difficult, but there are options available to you including the following:

1. Maintain ownership control. If your business idea is a sound one and you lack capital, are you willing to cede at least a partial share in your business idea to someone else? To release capital, an investor may want a stake in your business. That also can mean having a say in how you operate your business. Your best bet here is to find a silent partner, an individual that will front you some money and allow you to manage the business as you see fit. You’ll still have to repay what you owe, but you’ll have more leeway with this option.

2. Plan well ahead. If you need money right now, good luck with getting it immediately. Typically, you need to allow several months for your business to take hold and your financial details to unfold before you can obtain working capital. Often, this will mean conducting a cash flow analysis and have an excellent grip on how the money comes in and where it goes out. You need to anticipate potential challenges down the road including the need for new equipment, additional workers, or an expanded advertising campaign.

3. Know who you want to work with. Having access to money is one thing, but determining who you want to work with is another matter. Know that the people you work with now will most likely be the individuals you will work with long term. For one, you’ll want to build a relationship by maintaining same with someone you trust. For another, you’ll want to have access to working capital without having to start the borrowing process all over again. Look for someone who can work with you over the first seven to 10 years of your business.

4. Consider other forms of support. Raising funds means looking at every possible option including the nontraditional. For instance, if your bank or other lenders are keeping their wallets shut, crowd-sourcing is another option. With crowd funding you can obtain a large amount of money from multiple sources to support your business. Visit the top sites to find an option that is right for you including:,, and Choose the site that might best fit your business.

Funding Considerations

You might also sell your business idea to family members and friends. The people that know you best are the ones that are most likely to offer you money, especially if you have a proven track record and a plan that could return strong dividends down the road.

See AlsoReliable Sources for Small Business Loans


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Categories: Business Services

About Author

Matthew C. Keegan

Matt Keegan is a freelance writer and editor as well as publisher of "Matt's Musings", his personal blog. Matt covers campus, consumer, business and financial topics on various websites and blogs, and has been published in the "Houston Chronicle", "Sam's Club Magazine" and "Wisconsin Golfer".