What is one thing I should do right away if my business is suddenly strapped for cash?
The following answers are provided by Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.
1. Review Your Billing Statements
If you are suddenly short on cash, I would recommend seeing exactly where your money is going. By looking at your transactions you may notice there is something you are no longer using like a subscription service. By cutting even small costs you can save yourself some cash. – Phil Laboon, Eyeflow Internet Marketing
2. Reassess Your Business Plan
If you’re out of capital you shouldn’t just chase more — you should determine what decisions got you to that point and reassess your financial projections and models. Are they really attainable? You owe it to your stakeholders to revise your business plan and to have a realistic understanding of how much funding you’ll require to grow and scale your company. – Heather Schwarz-Lopes, EarlyShares
3. Look for Unnecessary Recurring Expenditures
Recurring expenditures can add up quickly. Go through your bank account and take a look at what’s draining it. You’ll find that there are a lot of recurring subscriptions that you might not need anymore. Maybe it’s Basecamp for project management or an analytics platform you don’t use. Delete it if it’s not imperative for your business. – Andy Karuza, Gossip App
4. Ask Your Customers to Pay Up Front
If your business is in high demand, you may want to consider making some changes in how you require payment. When my company wasstrapped for cash we decided to see what happened if we asked our customers to pay in full up front. Turns out people did not have a problem with paying in full before we performed our party rental services. We now have a steady flow of cash to invest in new products. – Robert De Los Santos, Sky High Party Rentals
5. Lower Your Salary
The easiest place to cut expenses starts with you. When you start a business, you should already be taking the “MVS” (minimum viable salary). For some people, that is going to be $0. Others may have costs that they cannot defer. If you have personal savings, you can defer your salary until the cash flow situation improves. – Jeff Epstein, Ambassador
6. Sell Unused or Little Used Assets
Over time, businesses collect a lot of stuff that doesn’t get used all that much. It could be old computers and supplies that have made their way to the storage room. Post it on eBay or reach out to your customers letting them know you’re having an office sale. This can raise a few bucks quickly and will reduce the clutter, freeing your mind to focus on what’s important: generating sales! – Mark Cenicola, BannerView.com
7. Find Out Why
If you find your business suddenly strapped for cash the first thing you should do is find out where the unexpected expenditures are coming from. Much like an ER doctor stopping the bleeding before diagnosing the next step, a business should stop the unexpected cash flow then identify why budgets and forecasts are off the mark. – Phil Chen, Systems Watch
8. Figure Out Your Exact Overhead
Every high-figure business suffers from “creep.” There is usually a group of plush activities that can be cut; companies often get bloated without realizing it. There is also employee redundancy. Cross training employees is valuable, as many times multiple employees will be doing the same task. This is a place ripe for cutting back and conserving dwindling cash reserves. – Joshua Lee, StandOut Authority
9. Look for Discounts
Cut out anything you don’t absolutely need, then look for discounts on the things that you absolutely do. If you need to keep using Constant Contact to email customers, see if you can find a discount on that cost. Most companies offer discounts to businesses and are willing to work with you on pricing if it means you’ll remain a customer. Remember that it never hurts to ask. – Brooke Bergman, Allied Business Network Inc.
10. Question All Spending
If you actively monitor your cash burn and make sure accounts receivable and payable are in balance, you’ll hopefully stay out of cash-flow trouble. But if you’re strapped for cash, take a look at all your costs and ask yourself what you can do without and what you can push out. And make sure you have an approval process in place for spending to more closely manage your cash. – David Ehrenberg, Early Growth Financial Services
11. Use Bank of America Overdraft Protection
Bank of America offers a beautiful feature called overdraft protection. It lets you run debit transactions against the credit card. This even works for payroll if you use a third party payroll service such as Zenpayroll. Call your bank and ask for an increased credit line. Then run payroll against it. This has saved my business twice. – Kyle Samani, Pristine
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