The answer is: manage your suppliers and your customers. You have to watch closely your cash flow and cash cycle (what is the cash cycle? Will talk about it in a later post). In simple words you have to reduce the time it takes to collect your receivables and prolong the payment to your suppliers.
ARC Loans (America Recovery Capital), also called SBA Stabilization Loans, can be used to make payments of principal and interest on existing debt. These loans are relatively new (they are part of the 2009 Recovery Act), and are made by commercial lenders who are SBA participants. SBA guarantees 100% of the loan and pays the interest throughout its term. Moreover, there are no fees to be paid to the SBA. The loan disbursement can be effected over a six-month period, and repayment of the loan principal is up to five years, with the first repayment after 12 months after the last disbursement of the loan amount. In other words, there is nothing to be repaid for 12 to 18 months, depending on how you receive the loan amount.
What does really mean break-even? It is the level at which the company makes neither a loss nor a profit, but just covers it’s fixed costs or overheads. It’s the floating point, at which you know that you are not sinking. In practical terms it could be the level of monthly sales that, once reached, will give you the security of paying your bills, at least for that month. Or for a whole year. Or even how many units you need to sell in order to cover all the fixed cost, to pay all your bills. Read more…
