In general, the times when you need money the most are going to be the times when it’s hardest to get. Think about it from a lender’s perspective. If you’re hemorrhaging money, you’re a lousy risk. But even successful entrepreneurs have moments when there’s just an ugly money crunch, and the only thing that will get them past it is an influx of cash. Here’s how to generate some $$$:
1. Stop the bleeding
This step is absolutely the most critical. You must step back and take a hard, dispassionate look at your company and find places to cut expenses. Be creative, be ruthless, and if necessary, be willing to get an outside opinion. If you don’t get your expenses under control, then you’re going to be perpetually short of money.
2. Get a cash advance
This option is great if you’ve billed clients and are just waiting for them to pay up. A company called Fundbox offers in innovative solution. Fundbox gives you an advance based on your invoices, you collect from the clients, and you pay off Fundbox, with interest, of course. You don’t want to use this strategy as a day-to-day model, but it can help get you out of deep water.
3. Dig deep
If you’re sitting on valuable assets, you may have found the right time to sell them. Whether you find a buyer for heirloom jewelry or you decide to take a second job, sometimes a sacrifice can make the difference between keeping your business afloat or closing up shop.
When your problem is one of capital for an expansion of your company, then crowdfunding can be manna from heaven. If you’re going to make a go of crowdfunding, you need to prepare a compelling pitch (for which a freelance pro may be of use.) The only downside is that money for crowdfunding can take quite a while to make it to your bank account, but if you have a brilliant idea that you simply don’t have to money to implement, crowdfunding may be your answer.
Don’t let the scary acronym (Rollover as a Business Startup) keep you from investigating this program that lets you use 401K funds for your company. There are lots of restrictions, so make sure you understand the program.
6. Get a loan
A loan won’t necessarily fix all your problems, but it sure can help with a short-term cash crunch. And businesses now have more options than just begging at a bank. Fundera is a fantastic lending operation that can help you with funds for any number of business needs.
7. Generate $$$
Okay, this may sound simplistic, but don’t leave any stone unturned when you’re in a fiscal crunch. My favorite option is to create a special offering, whether it’s a discount or a new premium package and get your clients to buy in. At the end of the day, it’s much healthier to bump up revenue rather than taking out a loan.
Finally, the best way to ensure your company doesn’t end up with a cash shortfall is to run your business profitably. Putting profit first and setting aside your predetermined percentage of profit from every single bit of revenue will help you trim expenses and ensure your company remains financially solvent.
Mike Michalowicz (pronounced mi-KAL-o-wits) started his first business at the age of 24, moving his young family to the only safe place he could afford – a retirement building. With no experience, no contacts and no savings he systematically bootstrapped a multi-million dollar business. Then he did it again. And again. Now he is doing it for other entrepreneurs. Mike is the CEO of Provendus Group, a consulting firm that ignites explosive growth in companies that have plateaued; is a former small business columnist for The Wall Street Journal; is MSNBC’s business make-over expert; is a keynote speaker on entrepreneurship; and is the author of the cult classic book, The Toilet Paper Entrepreneur. His newest book, The Pumpkin Plan has already been called “the next E-myth!”