Do you need to have money to make money? In some cases, it may be true, but not always. Despite the common notion that cash will solve every problem, creative problem-solving is what really builds a successful business.
Whenever I talk to small business owners, access to capital often comes up as one of their biggest challenges. So, it was no surprise that the subject came up when Barbara Corcoran (entrepreneur and Shark Tank judge) offered to answer questions for small business owners. When one participant asked for advice on taking her business to the next level without significant cash flow, Corcoran had this to say:
“A shortage of cash is part of every business, and it’s a problem that never goes away. That’s the bad news. But the good news is a lack of cash forces you to spend every penny wisely, and the best money you’ll spend is on things that directly lead to sales. Anything else is a waste of hard earned dollars.”
This isn’t necessarily a problem for only young companies, but it’s pretty prevalent there. When resources are scarce, you’re careful with every penny. If it doesn’t add value or create additional profits, most business owners take a second look before they spend money on anything. This was certainly my experience.
Nevertheless, in addition to Barbara Corcoran’s advice, here are three things you can start doing now that will help you navigate growth with less cash.
1. Be Creative
As Barbara suggests, a lack of capital forces you to think long and hard before you spend precious resources. Sometimes, you can find creative ways to solve problems that don’t require a lot of money.
John Sperry (Founder and CEO of InMoment) recommends finding creative ways to work on the cheap without the need for a lot of cash. “For example, by taking a very expensive IVR (Interactive Voice Response) system, via the telephone and online, we were able to reduce our cost per customer survey response from $.60 for every interaction to $.06,” Sperry says. “We did a lot of things like that to make it less expensive for us to do business. Some of these things even helped improve our ability to build the best product in the end.”
2. Use Elbow Grease to Get Things Moving
A few years ago, some partners and I owned a small photographic supply business with customers all across the country. We didn’t have the capital to hire an outside marketing firm to do direct mail for us, so we decided to do it ourselves.
We put together a weekly postcard sent out to several hundred customers every Monday evening. The postcards were created in-house, printed at Kinko’s, addressed, postage added, and then I would drop them off at the post office on my way home from work. Like clockwork, starting every Wednesday the phone would ring with customers asking about the special offer. We even had some customers call asking why they didn’t see that week’s postcard, if they somehow got missed. I’ve often wondered if we would have had the same results had we hired someone to do it for us.
The four of us would sit around a table and do this every Monday. It was actually good for our partnership and our business. What’s more, it cost us a fraction of what hiring a direct mail agency would have cost.
3. Position Yourself for Tomorrow
It really doesn’t matter if your business is brand new or has been around for a few years. At some point, you might feel the need to look for extra capital to fuel growth in your small business. If you’ve prepared by taking steps to build a credit profile, you’ll have more options when you need a small business loan.
I often hear small business owners lament that they need credit to build a strong credit profile, but they can’t get credit. So how do they do it? Although this feels like a catch-22, there are some easy ways to start building a track record and demonstrating your business is creditworthy.
For example, do you have suppliers that offer payment terms of 30 or 60 days? It’s not a small business loan, but it is a step there. If you make timely payments on your account and they report to the business credit bureaus, young businesses can start building their business credit profile.
Additionally, places like Home Depot, Lowes, Office Max and Staples all offer credit terms to small businesses that report your business credit history to the business credit bureaus.
A business credit card is another way to start building business credit, but you will need to make sure they report to the business credit bureaus.
These are great ways to build your profile today, so you’ll have more financial options in the future when you need a small business loan to fuel growth.
My Last Words
There’s nothing easy about building a thriving and growing business. It’s a lot of work. Doing it without a fat bankroll can sometimes be even more challenging, but creatively solving those challenges can make your business stronger.
Don’t be afraid to think outside the box. Look for unorthodox solutions to your business challenges. Realize that sometimes the solution to a lack of money is elbow grease. Focusing today on what you can do to improve your options for tomorrow will help you prepare for the extra capital to fuel growth.
Photo credit: Pixabay