How do you carry on when your business runs out of money?
Whether you’re new to entrepreneurship or you’ve been in it for decades, you know how hard things can get when the cash flow dries up. You have to come up with ways to improvise; perhaps take out a loan, or step up low budget marketing,
But what if the cash crunch lasts longer? How do you manage the situation if you can’t even afford a loan, or paid promotions of any kind?
There are ways to get out of this quickly. We will be discussing some of them in this article.
1. Plug Cost Loopholes
Before you get on with bringing in revenue, you want to be sure that you’re not bleeding resources in the first place.
There are many possible holes through which you may be losing money. Look through your accounts and see if there is overspending on any items. Maybe you’ve been using more electricity than you need or underutilizing your subscription to data services. These are just a couple of areas in which your expenses may be exceeding what you require.
2. Request Upfront Payment
If you haven’t been asking for payment before delivering a service, it may be time to begin demanding it. Your room for maneuver on this will depend on the type of product or service you’re selling. You may be able to ask for part payment (25% or 50%, for example).
With customers paying upfront, you should have funds flowing into your business again in a short while.
3. Renegotiate Terms with Suppliers
Try renegotiating your terms with suppliers, to get a contract that’s more suited to your current financial position. The new agreement may involve longer payment periods for bigger bulk supplies or paying in installments.
You should be able to establish new terms if you have a good working relationship with your vendors.
4. Partner with Complementary Service Providers
Partner with a company that sells something connected with your product. For example, if you’re a digital marketing agency, you could link up with an IT infrastructure company to offer your services as an addition to theirs. They could market your content strategy offerings as an extra service for their clients; they’ll take a cut from earnings you generate off traffic from them.
5. Raise Funds from Other Sources
You may seek funding from other sources, like family and friends, cooperative societies (if you belong to one), or even online lending platforms. Perhaps you’ll have to draw from your personal savings as well if that’s available.
Just be sure that you can repay when the time comes.
6. Increase Your Prices
This could work if your product or service has a somewhat inelastic demand (in other words, customers don’t usually reduce orders when its price goes up slightly). Look at the rates your competition is doing for a product or service of similar quality. If there’s room for a greater margin than you’re currently operating on, you should grab it.
If these don’t work, you have the option of selling your business, or valuable parts of it. You shouldn’t lose everything just because your enterprise fails.
However, we are optimistic that you’ll come through whatever hard patches you’re facing. The tips we’ve shared here should help you beat your dry spells should your business run out of money.
Featured image source: MRR Media