Use these 3 alternative business funding strategies to avoid cash flow exile.
Yes, Survivor may now be the ‘old-timer’ of reality game shows, but who can deny the sheer thrill you still get when your favorite players claim victory and send the other team to Tribal Council? When it comes to battling it out in business, finding the craftiest ways of improving your bottom line can also feel like winning an immunity idol and sending the competition packing.
Your finances are likely where the game can be won or lost. For alternative business funding, in particular, there are trends that continue to shape the way modern companies can secure the right working capital — some brand new and some time-tested and client-approved.
Survivors Ready? Here are three to keep an eye on as you outwit, outplay and outlast your competition:
1. Outwit your bank loan challenges
When you need business 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 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 tribe (aka your 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 be willing to say no when that opportunity is more likely to lead to your torch being extinguished. 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.
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 to 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.
Even if you’ve been exiled to Redemption Island, you have a shot at coming back and winning Cash Flow Survivor. Obtain your secret advantage by 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.