We have a friend who is setting sales records in her business. However, she recently faced a severe cash crunch. She felt overwhelmed and discouraged, to the point of giving up. She was scared. What should she do?
We told her to find the low-hanging fruit!
When you’re faced with a cash crunch, think about all the places, prospects, and possibilities where you could get cash today. Then spend your time on the things most likely to pay off TODAY.
5 things to understand about this strategy
#1 – Long-term strategy
This is not a good long-term strategy – in fact, it distracts from it! However, when survival is the issue, who cares? Survive today so you can thrive tomorrow.
#2 – Perceptions
This strategy can create misperceptions with customers, employees, vendors, and investors. For example, customers may expect discounts if you offer them frequently. They’ll sit back and wait for the next one.
#3 – Frequency
If it happens occasionally, perhaps seasonally, that may be okay. Even then, you should plan for those occasions in advance. If you’re in this position frequently, it’s probably a sign of a bigger problem.
#4 – Financial statements
To find the real problem, understand your financial statements. What are the numbers telling you? How can you prevent this from happening again? Is it a short-term problem? Or do you need to make some adjustment for the long-term?
#5 – Mindset
Get over any reluctance to cut special deals. Some people really struggle with this. For example, they find it hard to sell inventory at less than cost. But if it’s not selling at its current price, it’s not worth its current price! Mark it down so it moves and you get the cash you need!
5 places to find cash today for your business
#1 – Call people who owe you money.
See when they will commit to paying. Consider a discount if your situation is severe enough.
#2 – Contact customers.
Find the customers who are the far along in the sales cycle. Follow up on proposals you’ve already made. Once again, if your situation dictates, offer them a discount for signing on the dotted line and paying today.
#3 – Work your contacts for referrals.
Who do they know that might do business with you? Tell them you have a special deal that you want to share with as many people as possible.
# 4 – Sell assets you don’t need any longer.
They’re costing you money sitting around. This includes inventory as we discussed earlier. Also think about your receivables. If you have customers with good credit, you may be able to sell your receivables to a factoring company.
#5 – Borrow.
This is similar to #4, only here you use your assets as collateral for a loan. You have a short-term problem; get a short-term loan!
One final tip – don’t appear desperate. People do business with successful people. So don’t present it as your problem; show them an opportunity.
Our bigg quote today is unclaimed, but still good.
And absence makes the heart grow fonder!
Next time, we’ll discuss six factors that will help you succeed when opportunity knocks. Until then, here’s to your bigg success!