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How to Build a High-Tech Contracting Business without Loads of Cash.

Written by: Manny Nowak

Article Overview: When it is time to pay the bill it is time to pay the bill. When it is time to make payroll, it is time to make payroll, when it is time to pay taxes, the man does not wait.

How to Build a High-Tech Contracting Business without Loads of Cash.

Now I want you to try and explain this simple concept to the large companies in America and world wide. They cannot seem to understand that as a small business I need to get paid faster. As a small business I need to turn my money quicker. As a small business I am not their bank.

The answer from them, however, is simple, “if you cannot hang, then we have many people knocking at our doors every day”. You either deal with the terms we give you, or you drop out.

As a small business, we love large clients. The work is plentiful, the rates are great, they keep asking for more. Yet as a small business we only have so much cash.

In the high tech contracting business this can be a total nightmare. You can have great big contracts, many sub-contractors and not enough cash. It really stinks when you have to turn down work because you know you cannot pay the sub-contractor in the time they need to be paid. Your bank will not give you any more on you credit line, your credit cards are maxed out. And you just cannot handle anymore debt.

So how is a small business to grow? Is this why so many small businesses never do grow, they stay small forever. Do you have to let the work go to some other, large firm? The answer should be, “no way, I am a business person and I want to make money, I have to find a way to make this happen”.

In comes factoring. The knight on the white horse. For many years it was not thought of well, it was the first step to bankruptcy. But not anymore. Now for a minor fee you can complete. You can get the cash you need. You can keep on growing.

Very simply put.
You hire a new sub-contractor at $75 an hour, billing her at $100.
She works for you 40 hours a week, billing $4000.00
She gets $3000 a week.
She bills you every 2 weeks with a 2 week due date.
You bill your client every 2 weeks and he takes 60 days to pay.

No problem
You take your invoice and factor it, getting 80% of the invoice in a week.
That covers your cost and you still have a little left.

With factoring, you can grow your business to great new levels of success.

Let’s look at another simple example:
If you contract people at $75 and hour and bill them at $100 an hour
You bill the client $4000 a week and it costs you $3000 a week.
You make $1000 per person per week.
If you can get 10 of these on board you can be generating 10k a week.
But you have to pay 30k a week to them.
Now if your client pays in 60 days and you have to pay in 15, you are in trouble and you cannot grow.
But, it you factor, you get your money in plenty of time to pay the people and just wait on the profit.

If you want to grow your business, and money is an issue, you need to look at factoring. Simply put, this is a great tool to help you grow.

Manny Nowak is a developer of tools to help the entrepreneur and business owner to grow and build their business. To learn more, click here.

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Article Tags: bankruptcy, business person, contracts, credit cards, doors, due date, invoice, minor fee, money, nightmare, small business, small businesses, white horse



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Re: Great start, but no finish - My advise is FOCUS on your business. Focusing is the main factor to succeed on business. If you have a great idea, then follow it only, don't look anywhere else. It is especially essential in an online business. Because there are a lot of mind blowing sales letters promising millions dolllars or overnight success, people find it difficult to concentrate on one business and they lose their energy. Concept is simple. 1- Have a good idea; 2- Build your business on it; 3- Monetize your business; 4- Promote it; 5- Build list of responsive customers; 6- Maintain You Business. Focusing and not fearing from competition (instead you can learn from competitiors) are main tips of billionaires ,BTW. Orxan
Re: Improving Cash Flow - Thanks for your information. guide on how to avoid the problems of over trading. <-- Where is this guide? Any URL? guide on debt factoring and invoice discounting: the basics. <-- Where is this guide? Any URL? I just want to learn more about this. I am also looking for a good article on: What exactly is Cash Flow? Ways to improve cash flow at individual level and organizational level? I think it is a problem of thinking and mind sets problem. If we can change the way of spending, we can have more Cash. Robert
My entry - 1. The Best Business Books Ever: The 100 Most Influential Business Books You'll Never Have Time to Read - this is a fascinating book about the history of Business theory, and I'd recommend it to anybody. 2. The Big Book of Small Business: You Don't Have to Run Your Business by the Seat of Your Pants, by Tom Gegax. Ditto. 3. PADI: The Business of Diving Book Okay, so this book won't be of use to anyone who doesn't want to start a scuba store, but I did, and this book was of course invaluable to me in reaching that goal.
How do you know if you have a good idea? - [quote="orxan":3118uboz]My advise is FOCUS on your business. Focusing is the main factor to succeed on business. If you have a great idea, then follow it only, don't look anywhere else. It is especially essential in an online business. Because there are a lot of mind blowing sales letters promising millions dolllars or overnight success, people find it difficult to concentrate on one business and they lose their energy. Concept is simple. 1- Have a good idea; 2- Build your business on it; 3- Monetize your business; 4- Promote it; 5- Build list of responsive customers; 6- Maintain You Business. Focusing and not fearing from competition (instead you can learn from competitiors) are main tips of billionaires ,BTW. Orxan[/quote:3118uboz] Thanks orxan! But how do you know if you truly have a good idea or not? If we ask ourselves, we may be suffering from tunnel vision. On the other hand, friends/family may try to discourage us from pursuing a small business because of their own fears, while others will simply give us an empty "you can do it!" line.
Improving Cash Flow - How do I improving Cash Flow? What the best way to improve it to another 100% growth YOY? Has anyone does this or achieved this using online marketing? Thanks, Roberts


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