A business’s working capital is the money that is on-hand to spend each day. This money can be used to pay for employee paychecks, inventory, machinery upkeep, and other operating costs. For a business to be successful, there should always a healthy amount of working capital in the business. While it is best to have this money in actual currency (whether it be in cash or in the bank), working capital can also be held in the form of owned (and paid-off) property, technology, and machinery.

Buy Instead of Rent

Since owning machinery and other business technologies counts towards a business’s working capital, it is better to own your business equipment instead of renting or leasing it. However, this may not always be an option for businesses that are just starting out, as some business equipment can cost upwards of thousands of dollars.

The same practice goes for business properties. Renting and leasing business space can cost more than mortgaging the same property in some places. Again, there are pros and cons to this. There is much more commitment involved with buying a business space than renting. Consider how long you plan to operate your business in the same location. This way, you can do the math on whether or not it is worth your time and money to buy over renting property.

Stick to a Strict Budget

One thing business owners can do, even if they are just starting out, is to make a budget and make sure to stick to it. While this sounds obvious, accounting doesn’t come naturally to everybody. Like anything else in the business world, it is a skill that needs to be learned. If you have no experience with accounting, you may want to take some classes. If you have tried to do accounting work before and are not good at it, you may want to hire an accountant instead. Even hiring a part-time or freelance accountant to take care of your finances can help to keep your business capital at a positive level.

Doing these two things can make all the difference between having a positive or negative business capital. Sticking to these tips can also help business capital to grow slowly over time. So, consider buying over renting when you can afford to and work on your finances or hire someone to help you. Feel free to combine these tips with any other money-saving tips you know, too!