Running a small business is energizing, creative, and innovative but can also be challenging. One of the most significant areas where small businesses have issues is cash flow and getting a loan. So, how do you run a small business, and raise money when you need it without getting a loan? There are several ways, from invoice factoring to grant applications. We focus on some of the alternatives.
Crowdfund
If you have an idea and don’t have the funds to get it off the ground, consider crowdfunding. You present your idea and ask for donations, usually online. Some crowdfunding platforms simply take money, while others list items in return for a donation. You can be creative with those items as they can attract customers who want to support your business. Crowdfunding is increasingly popular and is an innovative way of raising funds instead of a loan.
Offer Incentives
When you run a small business, generating new clients can be difficult. However, using incentives can create more income and customers. For example, having a special offer or discount for people who introduce a new customer helps generate business. Another opportunity to run a small business, expand, and not get a loan is by using loyalty cards, where people get a discount or reward if they buy specific amounts from you.
Manage Debts Effectively
It takes just one slow repayment or defaulter to cause a severe problem with cash flow. However, monitoring your invoice repayments can be challenging when you are busy. Invoice factoring helps with debt recovery as you sell your bad debts. You get some funds back, but the factoring company chases the debts so that you can focus on other things.
Automating payments and invoices is another way of ensuring cash flow promptly and that you develop good relationships with other businesses for paying on time. Having automated inviting alongside invoice factoring is an effective way to manage cash flow through your company. A factoring company will be able to support you so you can focus on income generation. Interestingly, factoring companies also purchase structured settlements which could make debt repayments even easier!
Networking and Collaboration
Growing a small business can be difficult, especially when finding new clients. However, networking with other companies gives you ideas and helps you collaborate. For example, a gardening business can work in partnership with a gift company to offer a competition or special deal. As a result, both companies benefit, and your collaboration may attract other businesses to do something similar. Competitions also generate data for mailing lists and future potential clients. Another effective way to network is to attend a trade fair or conference to get inspiration for new ideas on how to develop your company.
Clarity on Terms and Conditions
Your small business will be dependent on other companies either providing a service for you or you doing something for them. Therefore, it would be best if you protect yourself by having a signed contract in place for most jobs that detail the expectations of the client and you as a business. It includes deadlines, the work itself, and payment terms such as when you expect to get paid. If you need materials ordering for a job, ask for a deposit upfront, so you don’t compromise your cash flow. By using contracts, you promote clarity, especially around expectations and payments. Hopefully, it will motivate the customer to pay on time, so you don’t have to use a factoring company.
Outsource Work Where Possible
Employees are one of your most significant sources of expenditure in a small business. So naturally, you need various roles to work on jobs, but it’s also good to consider other ways of getting experienced staff to save on full employment costs. For example, you can use experienced freelancers for project work and marketing. In addition, some jobs such as accounting, payroll, and HR can be outsourced, so you have more time to focus on the business.
Take Time Out to Be Creative
As a small business, you constantly need to be looking for new ways to generate income and manage your finances. Take time to review your current processes and expenditure to see what can be made more efficient or cut. Make time for existing customers, but continually look for new clients because you should never be dependent on one organization. Dependence on a major client or business can place you in a difficult position if they go out of business, so look at ways of being agile and resilient. It’s also essential to use the time to think creatively about ideas to generate new business and innovate, as this will keep the business fresh and exciting.
Growing your business without taking out a loan can be tricky. Still, by taking a few steps to evaluate your position and implement changes such as invoice factoring or collaboration, your business will be stronger and able to survive in a turbulent environment. So take a look at the ideas and start planning your business growth today.
