A key survival skill that all entrepreneur bootstrappers need to know is how to generate cash in their business quickly. The ability to withstand and manage the up and downs of cash flow makes the critical difference between business success and failure.
I learned this lesson while in the small business trenches of a fast-growing and cash-hungry firm. As a fast-growing company, we were getting into cash crunches regularly – even though sales were increasing nicely. In fact the faster we grew the more our working capital was strained.
These are my tips and experience that I learned on how to surmount negative cash flow issues and working capital shortfalls which helped me navigate the money needs of a voracious startup.
>>Also check out this book I found helpful written by a CPA accountant that taught me how to keep my cash flowing and plug up profit leaks.
Come along let’s generate some cash flow now!
14 Ways to Generate Cash in Your Business – FAST
- Presell Orders with special discounts. This technique worked well for my manufacturing company. I called ten of my best customers and offered them their favorite products at a discount, to be shipped in the next month, IF they ordered now and paid a deposit. Not only did this tactic generate thousands of dollars, but it also bettered my customer relations. They appreciated the personal call from the business owner and we had a chance to talk about how I could serve them in the future with new products or promotions.
- Collect invoices at reduced rates. This technique is to contact your customers with overdue invoices and offer to accept less than the total amount as payment in full if they pay now. Remind them that this is a special case, one time offer only. In some cases, this enabled me to collect on a bad debt, which may have gone completely unpaid. The best targets to use this for strategy are customers who want to reorder from you but cannot because of their overdue accounts. I collect a few payments and also got some new orders from those previously delinquent customers. Win – Win 🙂
- Cash out your invoices – Are you waiting for customers to pay invoices for cash? My company had thousands of dollars in unpaid invoices which tied up our working capital. So we used Fundbox to turn those customer invoices into needed cash. It was super easy with the mobile app and integration with our accounting software Quickbooks. Learn more about how invoice financing works and read my review of Fundbox.
- Lend out your employees. If you have employees working in easily transferable and in-demand business functions such as delivery, collections or accounting, you have a saleable commodity. When times were tough in my company I sold my delivery services to other local firms. My driver did both deliveries and I collected extra cash.
- Take on subcontracting jobs. As a manufacturer it is common practice in addition to producing your products, to make private label goods for other companies. In industry, cosmetics, it is especially prevalent. Many luxury brands such as Lancome are made in the same factory as inexpensive private label makeup. NO, they do not use the same ingredients or processes, but they do share some of the same manufacturing equipment. We subcontracted to mix and fill body lotions for another, a non-competitive company which generated a substantial amount of cash and resulted in good future business opportunities.
- Do some consulting work. If you are a service firm you can pick up extra funds by becoming a consultant by using your valuable knowledge and existing skills. Certainly, don’t do this for your competitors. Instead reach out to different markets, geographic areas or related industries. An example of this type of consulting is when a criminal computer hack becomes an internet security expert and is hired by the police. In fact, I often take on interesting consulting work for other business blogs both to earn money and to network. Check out these articles I wrote as a consulting editor on one of my favorite business sites SmallBizClub.com
- Run a sale. They key to making this a quick funding source is to make the sale almost impossible to resist with a super short time period – like a flash sale. Review your stock and find items that you can discount, while still making a profit, and start promoting both online, in-store and by telephone.
- Put ads on your website. The traffic that comes to your site is full of valuable eyeballs of people that other companies may want to reach. Think of complementary but not competitive type firms. Such as if you own a restaurant, offer paid ad space to other local attractions such as movies, theatres, and art tours.
- Get a working capital loan – I found that my company needed more working capital as I grew so I applied, and got approved for a Kabbage working capital loan. It was so easy. During lunch, on my mobile phone with the Kabbage app, I applied and got approved right away. Unlike many traditional lenders Kabbage reviewed my business metrics, such as sales, and merchant account payments, to approve my loan. You may be surprised how easily you can get your credit line approved at Kabbage. I was! Read my review of Kabbage business loans. Learn more about industry-specific lines of credit such as for restaurants, salons, auto repair, and construction.
- Promote other company products. Utilize your current marketing activities, such as your tradeshow booth or showroom, to promote other company products and get paid. For the home decor industry, it is standard practice to promote multiple companies in one showroom, such as dishware, table linens, and silverware, all from different companies. Charge a flat fee and also get commision new orders you obtain for the other company.
- Sell the furniture. Look around do you have an extra desk, some chairs or file cabinets that could be better used for your business growth by being converted into cash. If so, then sell them. Place a local classified ad, or list them on Craigslist. Recently we sold 50 extra event chairs we no longer needed.
- Sell merchandise or equipment to other companies. Here is where you can offload, either overstock or slow-moving items to other firms or if you are a manufacturer sell under-utilized equipment. We sold some machines we had in storage and made $5,000. A friend of mine who owns a clothing boutique was short on cash so she sold some of her inventory to another boutique in a different state which made it a non-competitive transaction. More money!
- Rent out your facility. Your space, whether a store, factory or restaurant, is a good source to generate funds by renting it out for special events. In New York City some luncheonettes rent out their places for dance clubs at night. After clearing away the lunch tables the area is a large dance floor. My husband’s boatbuilding shop often held special tours for boat enthusiasts and charged admission. Get creative. Could your salon be a birthday party spot for teenage girls who love hair and makeup, or your warehouse an impromptu dance hall?
- Negotiate payment terms. To free up cash for other uses, or to cover working capital shortfalls, talk to your suppliers and landlord to discuss delaying your payments. You will need to offer them some incentive to accept your offer, perhaps reoccurring orders to your suppliers or to make improvements to your space to increase the value of the landlord’s property.
- Trade instead of buying. To conserve cash and help your cash flow better, try trading, instead of buying services and supplies. You can do a direct trade, some of your merchandise for rent payments, or you can join a barter network. ITEX is a national barter network you could consider.