3 alternative business funding strategies to help you avoid cash flow exile.
With 42 seasons under its belt, Survivor has lasted the test of time and remains one of the longest-running reality TV game shows. To win the game, you must not only be strategic and form alliances, but you also need to have sheer determination to overcome the challenges contestants are faced with.
And when it comes to battling it out in business, finding the craftiest ways of improving your bottom line can often feel like you’re competing for an immunity idol to send the competition packing.
Often the biggest obstacle standing between a business owner and success is working capital, and having sufficient cash flow to support your goals. Luckily alternative funding solutions can be the immunity idol that growing companies have been searching for.
Here are three ways to outwit, outplay, and outlast your competitors to the finish line of the fiscal year.
1. Outwit your bank loan challenges
When you need funds, one of the first places you likely turn to is your bank. But banks can have strict criteria and getting that loan can become an instant roadblock. Unfortunately, it’s no surprise that businesses can struggle when trying to access credit and a lack of cash could put you on the chopping block.
To outsmart the traditional loan criteria, form an alliance with an alternative funding partner who can offer you solutions such as invoice factoring — allowing you to sell unpaid invoices to access cash faster. You get paid upfront and can continue operating as usual, even if your credit rating isn’t the strongest. The important part is to form that alliance with an alternative funding partner that has a proven track record and is willing to work with you to advance your business goals.
2. Outplay the risk
Being marooned with no lifeline is a horrible feeling, so it’s important to have a support team to help avoid any risk in the business that can leave you stranded. Whether it be the risk of not getting paid on time (or at all), being subject to fraud, cybersecurity risks, or not getting cash in time to pay your suppliers or staff, you’ll want to mitigate the issues.
To start, ensure that your alternative funding partner has the experience to back up their claims. They should have their own team dedicated to assessing risky funding opportunities, and they should understand your specific cash flow challenges so they can help keep your torch lit. And since 76% of businesses are concerned about cybersecurity risks, it’s important to work with partners who are equally aware of online risks and take data privacy and security seriously.
Related Read: 5 ways factoring can clear your cash flow hurdles
3. Outlast without giving up equity
When you work so hard at growing your business, would you give up equity in the company to gain financing? Many business owners do this, turning to venture capital firms, angel investors, crowdfunding, or even friends and family to increase their working capital. But according to the University of Cambridge, 67% of companies would still rather follow a debt financing model (such as PO financing) than give up a portion of their business
Why is this the case? It may come down to predictability. Looking at your balance sheet is often easier to understand, and knowing exactly how much you are borrowing (and need to pay back) can allow the average business owner to formulate a plan that fits into their schedule. The equity model, on the other hand, can raise more questions and leave you wondering just how much of your business you’ll leave on the table.
Make a comeback
Even if you stumble upon cash flow challenges, you can still make a comeback. Obtain your secret advantage by conducting a cash flow audit and updating your cash flow budget to accurately forecast your incoming and outgoing cash flow. Assess all the financing options available to determine which will be best at maintaining consistent cash flow to stay ahead of expenses. And of course, don’t be afraid to explore options beyond what a bank may have to offer.