How to determine working capital needs for a business

7:19 AM, Mar 13, 2019
4:53 PM, Mar 21, 2019

Do you have a million dollar idea? If so, congratulations!

While great ideas may come to you in spades, executing one of them so you can make money and support your lifestyle is a different story. Get your idea off the ground with the three C's: Control, commitment and capital.


When it comes to control, it's not just about owning the idea, it's about owning all the decisions that come afterward.

"Early on, a CEO has little to work with — because their company is still a relatively tiny operation, they have to do more than anyone might expect," according to business publication Inc. "Distributing tasks simply isn't an option when there are so few people to share them with, so it's up to the leader to pull up their boot straps, crack their knuckles, and do what needs to be done."

Small business owners understand how important it is to be the boss and get things done. Yes, you assume the risks, but the upside is that you call all the shots.


To turn a good idea into income, prepare for a long road ahead. This is where the commitment comes in because the first years can be tough — not just for you but for any business partners, employees and even your family.

About two-thirds of businesses with employees survive at least two years and only about half survive at least five years, according to the U.S. Small Business Administration. This trend is the same across different industries and has stayed steady for decades around the United States.

If this seems discouraging, take heart that a well-executed idea can survive even during periods of economic downturn. This holds true for manufacturing, retail trade, food service, hotels and construction, according to the SBA.


The third C is essential. Capital is the shelter that helps you weather the storm of economic forces outside your control.

"In order to ensure that your business is able to survive, you require working capital," according to Liberty Capital Group. "This is because every business requires cash to carry out its day-to-day business. It doesn’t matter how many account receivables you have if you don’t have enough money to carry out your daily operations."

There are three pillars of working capital needs for any business, whether private or public:

  • Growth — Does your idea need to be manufactured? Does it need a good supplier, proper packaging or a signal boost? You need capital to make that happen, whether it's a slow and steady stream or something that needs quick growth.
  • Sustenance — Is your business humming along? Great! Nothing keeps that engine running like having money to pay your employees and putting profit back into the business or your own pocket.
  • Survival — If you've hit a rough spot, don't despair. You don't need to close up shop just yet. You may just need enough cash to keep the lights on for a few more months.

No matter what stage your business is in, you need some form of working capital. If you are in the survival stage, having access to the money you need at the right time can be crucial to get you back on your feet in the long-term.
Give your business the capital it needs with the simple funding choices from Liberty Capital Group. The five-minute application is free, and some options are available in as little as 24 hours. Liberty Capital Group has been a leading provider of loans to small businesses for more than 15 years.

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