In this guide, we’ll cover six ways working capital can be used to grow small businesses in every industry. From managing cash flow gaps to hiring costs to expanding your business, the sky’s the limit with additional funds.

1. to Use Working Capital
to Grow Your Business
How to use working capital to take your
business to the next level.
6 WAYS
guide brought to you by
*Includes results gathered from a Kabbage survey polling 500 established small businesses.

2. All businesses, no matter the size or the lifespan, seek additional funding
at some point. Choosing from the options available can be confusing or
intimidating, but with the right amount of research you, too, can take the
leap for your business.
With a strategic plan in place, you can make your funds work to grow
and manage your business. For example, let’s say you’re a restaurateur
and now want to expand your offerings to a food truck. You’d start by
researching costs, creating a budget, mapping out a hiring and marketing
plan (and a driving route) and more. Your business funds could help you
execute each part of the plan without blowing your budget.
In this guide, we’ll cover six ways working capital can be used to grow
small businesses in every industry. From managing cash flow gaps
to hiring costs to expanding your business, the sky’s the limit with
additional funds.
MANAGING CASH FLOW GAPS
PURCHASING INVENTORY
INVESTING IN EQUIPMENT
HIRING NEW TALENT
EXPANDING YOUR BUSINESS
COVERING UNEXPECTED COSTS
INTRODUCTION
1
INTRODUCTION
1
2
3
4
5
6

3. Managing Cash Flow Gaps1
Cash flow challenges are one of the leading reasons small
businesses close, so successful financial management should
be a high priority. Cash flow gaps affect your ability to pay bills,
order inventory, pay new hires and other aspects of running
your business.
Reasons for cash flow gaps vary by industry, including seasonal
fluctuations, ordering too much inventory, late payments
from clients, overpaying vendors, or dealing with constant
equipment maintenance. When profits are absorbed by these
challenges, cash flow dries up. With more working capital,
you’ll have access to funds when you need them to cover
operational costs (expected or not).
MANAGINGCASHFLOWGAPS
2
kabbage.com/greenhouse
CASE STUDY:
Ted Dellas understands the
fluctuations of seasonality. His
business, LeisureTime Warehouse,
sells and installs pools, hot tubs
and saunas, seeing its seasonal
high in May and through the
summer. When he needed help
covering the slower, winter months,
he didn’t want to turn to traditional
lenders.
With working capital from
Kabbage, Ted got the peace
of mind he needed to cover
operational costs at the end of the
year. His business has grown to $4
million in sales and 15 employees.
CASH FLOW AS LARGEST
CHALLENGE BY STAGE
OF BUSINESS
A longer cash flow cycle hurts
your cash flow. By buying smaller
increments of inventory, hiring
staff during busy seasons or
requiring payments for orders
up-front, small businesses can
improve their own cycle.
20+
0 10% 20% 30%
10-19
5-9
1-4
0-1
YEARS

4. Purchasing Inventory2
Purchasing inventory isn’t a new concept to business owners,
especially those in the e-commerce and traditional retail
industries. Many need to keep a large amount of inventory on
hand to keep operations running smoothly but costs, demand,
and revenue can make it challenging.
Additional capital can alleviate the challenges of purchasing
inventory. You’ll be able to keep up with customer demand,
prepare for your peak season, take advantage of potential
wholesale deals and separate yourself from the competition by
offering unique products or services.might not be following you.
PURCHASINGINVENTORY
3
INVENTORY MANAGEMENT
AS LARGEST EXPENSE BY
STAGE OF BUSINESS
CASE STUDY:
After Sarah Kelly was diagnosed
with breast cancer (while 32 weeks
pregnant), she and her sister, Leah
Robert, decided to open their
own business: SaltyGirl Boutiques,
an online store selling organic,
sustainable and ethically-made
products from lipstick to jewelry.
Eventually, the sisters decided to
create their own line of natural and
organic cosmetics, SaltyGirl Beauty.
Offering even more products
wasn’t without its challenges.
Even after raising funds from
an Indiegogo campaign, they
still needed funds to stock her
business’s new beauty line. With a
line of credit on its side, SaltyGirl
Beauty has been able to expand to
eight products in a variety of scents
and colors.
Managing your inventory
effectively can help increase
your bottom line.
20+
0 10% 20% 30%
10-19
5-9
1-4
0-1
YEARS
kabbage.com/greenhouse

5. CASE STUDY:
Before Tony Hernandez opened
Cienfuegos Cuban Café, he built
a following from his presence at
farmers markets, street festivals
and on social media. His daily sales
continued to grow from $400 to
$5,000, but his business lacked
two years of financial history to get
funding from a traditional lender.
When a health inspection required
him to update his equipment, to
the tune of $9,500, he wasn’t sure
where to turn. With funds from
Kabbage, Tony was able to cover
these costs quickly and surpass his
first-year business projections.
If a vital piece of equipment breaks down and needs
replacement, businesses might not always be prepared.
Equipment comes at a high cost, which can be intimidating, but
neglecting the need for it can hinder potential future revenue.
With working capital, you can upgrade, replace or purchase the
equipment you need to run operations as smoothly as possible.
If purchasing equipment is still too daunting, consider leasing
equipment for lower initial expenses and easier upgrades.
Investing in Equipment3
INVESTINGINEQUIPMENT
4
With Section 179*, small business
owners can deduct the full value
of certain equipment purchases
(new or used) up to $1,000,000.
This does not apply to leased
equipment.
EQUIPMENT AS LARGEST
EXPENSE BY STAGE
OF BUSINESS
20+
0 10% 20% 30%
10-19
5-9
1-4
0-1
YEARS
kabbage.com/greenhouse

6. Hiring New Talent4
HIRINGNEWTALENT
5
Hiring is essential for any growing business, large or small.
Ineffective hires and employee turnover can potentially cost
your business 30 percent of its yearly earnings, according to
the U.S. Department of Labor.
Instead of bargain shopping for employees, use additional
funds to invest in the right hiring platforms, post multiple job
listings, manage payroll and cover onboarding and training
costs. You could also use funds to give current employees a
bonus for referring talent, or simply to help retain them.
Encourage employee referrals
to get great new talent while
increasing employee loyalty.
CASE STUDY:
Diana Lewis and her husband,
James, opened their business
D&J Erosion Control in 2013, but
didn’t have the resources to grow
their crew of five. When traditional
lenders weren’t willing to take a
chance on their business, Diana
looked toward online lenders for
help and was able to grow her crew
to 13.
With a larger crew came more work
and jobs. Her business was able to
double its revenue over the past
year as it can now serve twice the
clients.
PAYROLL AS TOP CONCERN
BY STAGE OF BUSINESS
20+
0 10% 20% 30%
10-19
5-9
1-4
0-1
YEARS
kabbage.com/greenhouse

7. Expanding Your Business5
Expanding your business doesn’t have to be a pipe dream. In
fact, 59 percent of those applying for business funds do so in
the hopes of expanding their business or taking on additional
opportunities. Expansion is more than just opening a second
location. It can mean offering more products and services,
improving your website or even expanding to a new customer
base.
As you grow your business, increased revenue could help
manage cash flow, improve profits, acquire new customers,
hire new talent or improve your business’s credit score.
With working capital, you can alleviate some of the costs that
come with expansion with ease and flexibility.
EXPANDINGYOURBUSINESS
6
When expanding your business,
make sure to test the location,
products and services you
want to offer to be sure they’re
in demand.
CASE STUDY:
After establishing his successful
pizza business, Si-Pie Pizzeria, in
Chicago’s Lakeview neighborhood,
Simon Mikhail was looking to grow,
but he struggled to find funding
through traditional lenders.
With flexible capital through
online lenders, Simon was able
to open a second location. After
UberEats approached him with an
opportunity to make fried chicken
for delivery customers, he used
his additional funds to expand
once more and opened a virtual
restaurant called Si’s
Chicken Kitchen.
FINDING NEW CUSTOMERS
AS LARGEST CHALLENGE BY
STAGE OF BUSINESS
20+
0 10% 20% 30%
10-19
5-9
1-4
0-1
YEARS
kabbage.com/greenhouse

8. Covering Unexpected Costs6
Even if you’re the savviest business owner in the world,
unexpected events always occur. Perhaps unpredictable
weather shuts down business for a few weeks, a piece of
equipment breaks down, a top employee quits, a customer
walks away from a contract, or another unanticipated
problem arises. No matter what, how you manage these
issues can determine the success and longevity of
your business.
Planning ahead for emergencies is always a smart move,
and that plan should include additional capital for the
expenses while your business recovers. There’s no better
peace of mind for your business than some extra funds in
your back pocket.
COVERINGUNEXPECTEDCOSTS
7
CASE STUDY:
When Jacob D’Angelo’s food
truck, Rolling J’s Mobile Bistro,
suffered damages, business
had to temporarily halt. Jacob
was unable to find funds from
traditional lenders, even though his
business was generating more than
$100,000 per year.
With additional funds from
Kabbage, Jacob was able to
purchase a new trailer and
professionally paint it to brand
it with Rolling J’s logo. Since
then, he’s seen his gross margins
increase by 40 percent.
BIGGEST THREAT TO
PROFITABILITY BY STAGE
OF BUSINESS
Create a business emergency
preparedness plan to
minimize the damage and costs
to your business.
20+
0 10% 20% 30%
10-19
5-9
1-4
0-1
YEARS
kabbage.com/greenhouse

9. 888-986-8263kabbage.com
*Kabbage does not provide tax, legal or accounting advice. This
communication has been prepared for informational purposes only, and is not
intended to provide, and should not be relied on for, tax, legal or accounting
advice. You should consult your own tax, legal and accounting advisors.
Guides are for informational purposes only, and Kabbage does not guarantee
any result or benefit to customers based on the content of this guide. The
views expressed may not represent the views of Kabbage or Celtic Bank.
All Kabbage business loans are issued by Celtic Bank,a Utah-Chartered
Industrial Bank, member FDIC.
Copyright © 2019 Kabbage, Inc. All rights reserved.