Is your business suffering through a cash flow crisis? Plenty of companies have money problems on occasion. If you have any business cash flow issues, you have options to help you through the rough patches. Here are four ways to get funds to avoid bankruptcy.
Working capital loans
The obvious solution is often the best one in business. If your company is struggling to pay its bills, you need more money. Your best strategy is to get a business loan. Working capital loans provide some of the best options for companies with cash flow problems.
This sort of loan doesn’t require any collateral. You avoid risking anything outside your business or expensive real estate holdings of your company. In exchange, you receive the money that you need to stay in business.
Cut costs
Another good strategy is to cut costs. Every dollar that you don’t spend is one that you add to your spreadsheet at the end of each day. Your company likely has several expenses that are worthwhile but not essential.
For example, think about the cost of your building. Whether you lease or own the facility, you’re paying too much for it if you’re having cash flow issues. Evaluate the cost of moving into a smaller facility. Alternately, try to renegotiate your lease. If you own, consider selling immediately. You’ll solve your money problems, and you can also find a space that better fits with your company’s needs.
Offer special incentives
Whether you’re running a startup or a veteran business, you should have a few loyal clients. You also should have leads on potential customers. Pull out your list of contacts. Let all these businesses know that you’re looking to make a deal.
The idea is that to add cash now, you’ll offer a discount to these customers. They’ll pay less for your goods and services over time. In exchange, they’ll pay in advance. Since these businesses aren’t in peril, this offer is sound. They’re paying less for something that they plan to buy at full price. For your company, you avoid bankruptcy thanks to the new money. You must allow for these discounted sales when you plan for the future, though.
Reduce staff
No one likes the idea of layoffs. You’ll kill company morale if you fire multiple people at once. You’re sending the message that the company is struggling. Still, layoffs are unavoidable in some situations. When you’re trying to avoid bankruptcy, the only other option will cost every employee a job. Laying off a few employees is better than a business closure.
How do layoffs help your payroll? The two largest expenses of any business are labor and real estate. You likely pay your employees weekly or bi-weekly. Every layoff means an immediate savings in 14 days or less. You’ll also save on 401k matching and healthcare costs, but that cash won’t come immediately. Getting rid of a handful of employees will save you money now, though. It’s potentially the difference between survival and bankruptcy.
As you can see, you can solve your cash flow problems. Simply follow the four tips above to keep your business out of bankruptcy.
