The world of entrepreneurship is not a movie. This means that if you’re in the midst of financial struggles, you don’t know if this is a hardship that you will overcome, or this is truly the end of your story.
As the hero of the story, you have to do everything in your power to keep your business afloat. That can include asking some difficult questions, making even more difficult decisions, or thinking completely out-of-the-box.
It’s important to know that even during your business’ bleakest struggles, this doesn’t have to be the end. There are options for you; you simply have to look for them.
Today, we are going to walk you through some of the options you should look at while you are struggling and considering closing your business forever. We hope at least one of these options can spark something, and help you write the happy ending you and your business deserve.
1. Find a New Source of Cash
For all the complexity involved in running a small business, the simple truth is that the number one reason that small businesses fail is a lack of cash. This means that unlocking a new source of cash can unlock new possibilities and give your business new life.
Your first instinct may be to go to the bank for a small business loan. Or you may think that it’s time for you to learn about a business line of credit to bring in some new money. Unfortunately, the more financially dire your situation looks on paper, the less likely a major bank is to approve a small business loan.
Right now, the major banks are approving a record number of small business loans, but they are still turning away 80% of the applicants.
The small business loan application process can also take weeks (or even months) to process. So, if you’re urgently in need of help, the big banks are likely not the best way to go.
Beyond The Bank: Alternative Funding
If the banks say no, or you know for a fact that they will say no, looking into a merchant cash advance from a company like Payvant Capital could give you access to the funding that you need to save your business.
A merchant cash advance (MCA) is not a loan, which means it is not subject to additional stringent loan criteria that the big banks have to follow.
You can apply for a small amount, such as $5000 to float you during times of hardship. Or you might qualify for up to $500,000 to re-invest in your business or purchase major equipment.
The application process is also remarkably fast. You can apply completely online and have your answer within 24 hours. This is probably more appealing than piles of application paperwork and waiting for several weeks with the bank.
If you are approved, your MCA provider will advance you your cash, in exchange for a percentage of your future sales and transactions.
This can be particularly helpful when you are getting back on your feet because your payments are based on a percentage of your transactions. On the other hand, a bank loan would require you to make a static monthly payment every single month, which you may find yourself scrambling to make while sales are low. With an MCA, your payments will be low when sales are low. When sales are higher, you can make a bigger dent in your balance.
The other benefit of working with a merchant cash advance company is the flexibility. The funds you receive are yours to allocate and spend however you see fit. You can use your advance to restock inventory, fix damaged equipment, invest in a new marketing campaign, or pay your employees. If this sounds like something that could help your business, we encourage you to get in touch today to see what is possible.
2. Find the Problems in the Big Picture
When trying to isolate the reason your small business may be failing, it’s best to take a top-down approach. This means taking a look at a seemingly front-line micro problem, and seeing if there are bigger problems in play.
For example, let’s say two of your sales staff are simply not performing or bringing in any new business. A kneejerk reaction during times of financial hardship might be to let the (perceived) weak links go, because you are paying their salaries and getting almost nothing in return. You could also give their sales leads to more productive sales staff, right?
However, let’s take a look at the big-picture problems that could be hurting these two employees’ performance and contribution to the company as a whole. Maybe the problem is just above them in your sales management. Maybe they didn’t receive adequate training, or they’re not being suitably coached to improve. Maybe they’re not receiving a high quality of leads, and they spend their days wasting their time talking to prospects that are completely out of your target market.
This problem is not as simple as having two bad employees. If you were to fire them and replace them, the unresolved big-picture problems would most likely doom the new employees to fail as well.
3. Look at the Smaller Picture
Despite what was said in the previous section, this is not the time to “stop sweating the little things.” In fact, you should become more diligent with the little things and finding anything that is hurting your business.
Yes, you should look for a big picture solution to small problems. But, some of the small problems will have simple solutions.
The first thing you will want to do is go line-by-line on all your monthly spending and expenses. Anything that is not moving your businesses’ needle forward in any way needs to go.
The most likely culprits are usually recurring expenses that you will see every month. One-off purchases are typically more necessary or need-based at the moment. However, if you can identify a common theme among these one-off expenses, you may have uncovered a big-picture problem.
Take a look at your monthly expenses and ask how business-critical each one is. For example, look at things like monthly software subscriptions. Are they critical? Can you scale back to a cheaper package? Look at traveling expenses. Are all of these trips necessary and are you traveling as economically as possible? Look at things like social media ads. If they are not producing qualified leads or sales, you need to either do them better or scrap them completely.
4. Play to Your Strengths
When you opened your business, you likely had a strong idea of who your target audience would be. However, changes to the marketplace and unexpected surprises can change all of that.
It could be time to stop focussing on buyer personas that aren’t actually buying and pivot your attention to who is.
Narrowing your focus and going after a smaller sub-sector of customers can increase your sales. If you change your messaging and your marketing to focus on just that group of people and their pain points, you stand a better chance of resonating.
For example, maybe you are a boutique marketing agency that was open to any type of business in the beginning. However, as the years passed, you found that you were particularly good at creating results for law firms. Could you make that your specialty and rebrand yourselves as law firm marketing experts? If you focused on your successes in that area, with strong case studies to prove your results, this new target market could unlock new opportunities and revenue.
5. Avoid the Temptation to Wear All the Hats
One of the most common mistakes that small business owners make is taking on too many tasks themselves, instead of hiring or outsourcing someone else to do it.
This could help you cut costs, but you really need to be mindful of how much your time is worth. For example, you decide to let your social media freelancer go. You do this to save money, but it could easily end up costing you more.
Let’s say your time is worth $75 an hour as the business owner. If it takes you two hours to manage your social accounts, that work actually costs you $150. You were probably paying your freelancer less to do it.
Avoid taking on important responsibilities that are completely out of your wheelhouse. The most common example is entrepreneurs trying to do their own bookkeeping and accounting. A few expensive mistakes later, they often learn that this is something they should probably outsource to a professional bookkeeper.
6. Look at Your Space
One of your business’ biggest expenses is likely the lease payment. Have a frank conversation with yourself about whether or not you really need all of this space. Maybe you can downsize your location and save a lot of money.
A lot of professional service businesses are currently downsizing their office and moving to more work-from-home arrangements for their staff. Of course, this presents its own new list of challenges and it’s not a decision to be taken lightly. But, it can get rid of a tremendous amount of overhead that could be dragging your business down.
Moving from the trendy brick and mortar downtown location to remote workers could save your business, help you weather the storm, and put you in an even nicer office after a few years of rebuilding.
7. Re-think Your Staffing
Of course, in times of financial struggle like this, the mind goes to uncomfortable thoughts about layoffs. That could be the answer, but it doesn’t always have to be. Re-thinking could go further than redundancies.
For example, the biggest savings could actually come from reorganizing the employees making the least amount of money. Let’s say you’re a restaurant. The dishwasher position is notoriously low paying with a lot of turnover. And that turnover is actually incredibly expensive.
If you’re paying these workers minimum wage, ask yourself if you would get more reliable and productive candidates if you paid 20% more than minimum wage. Could paying them 20% more give you 50% more production, while reducing the cost of constantly having to recruit and re-staff the position?
8. Find a Mentor
Statistics prove that entrepreneurs with a mentor have a 70% better chance of surviving than business owners with no outside guidance.
The closer their experience matches your own, the more invaluable they will be. They have probably experienced the same trials and tribulations that you are going through right now. And if they agree to be your mentor, they can give you business-saving insights into how to survive.
If you think you already have somebody in your network that could be a candidate, it’s time to reach out to them. Most people are rather flattered when approached and happy to help somebody with the same entrepreneurial fire they have.
If you don’t have anybody in your network, there are mentor matching programs and apps that you can take advantage of. Even if they are a total stranger, they are probably not a stranger to your industry.
The story of your business can be a triumphant one.
Even if things seem bleak right now, a bit of homework might help you uncover the answers you need to survive and find new ways to thrive. Use this as an opportunity to take a closer look at your business and find out what you can be doing better. At the same time, exploring new ways to inject cash into your business and asking for help can be crucial in helping you weather the storm.
If your business is in need of funding and the banks have said no to a loan, we can help! We can help you get a merchant cash advance to help you save your business. We are more focussed on your future than your past.
The application process is simple, fast, and non-intrusive. You can get approved in 24 hours or less. You can start right now by calling 1-888-550-3162, or by entering the amount of funding you need into the pop-up on any of our webpages.