How to Expand a Small Business When You Don’t Get Paid on Time
Check out this recent article from BloombergBusinessweek:
Question: My father is planning on retiring and he wants me to help him grow his dump truck business. I understand the business model, but I can’t figure out how to cover the costs of adding more trucks to the company. Every time we add an extra truck to the fleet there are expenses, but the broker that pays us holds up funds for 75 days. How can I manage this finance problem so I can add new trucks?
Answer: Sounds like you need to do two things: Ditch your broker and reduce the expense of adding trucks to your fleet, perhaps by leasing them or getting financing through your bank.
First, think hard about whether it’s the best time to expand. Business successions tend to be tricky, especially when a founder is retiring and a younger family member takes over. You may want to consider waiting until you successfully get through the transition period and are comfortable running the company before you attempt to expand it.
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