The scariest thing that you have to think about when you are first venturing out in business is what to do if things don’t necessarily go to plan. This can be a daunting thought that is often put to the back of most people’s minds, but this is okay. It means that you are being optimistic about the future and what’s to come. If you don’t have to think about putting together a plan for financial hardship, it means that you won’t go through it - right? Well, not exactly. Almost every business has hurdles at some point, regardless of how long they have been established for. As long as you have a backup plan as to what to do should you hit one of these hurdles, that’s the best that you can do. So what are the avenues that you are able to venture down when things start to go awry?
Sponsorship
Whilst it’s generally the way that you as a company should sponsor smaller ventures, you may be able to get sponsorship from other businesses whose products can be used in conjunction with yours. This is quite a niche market to hit, but it usually leads to a collaboration or partnership further on down the line, which could be quite a savior for your business as it stands. There isn’t the opportunity available to pick and choose who you want to join forces with, and it’s usually a case of you having to go forth and propose your ideas to different businesses that you think might be interested. It’s a hard pitch to be able to sell, as other startups are possibly going to want to focus their efforts and attentions into their own company rather than keeping others afloat. It’s the bigger businesses that you need to try and get on board with.
Private Investments
It’s not as fancy as it may sound, as the private contributors to your company to keep it afloat are usually friends and family who are able to part with a bit of extra cash without much direct effect to their own finances. This shouldn’t be to their detriment, and you need to write up clear rules and regulations as to where their money is being invested and what for, and what control they may have over your business if any. Keep the boundaries clear to avoid interference, and get it written up in a contract when you intend to pay the money back and include whether any interest is to be added.
Loans
When you are not doing well financially, it can seem like a loan is the only option - and in most cases, this is probably true. But for many who haven’t got the credibility to back up their business, or the financial credit scores to be able to prove their lending efficiency, this can be a hard thing to do. However, you may be able to get a commercial loan which is offset against your equity, with a figure drawn up that relates to the amount that you have. There could be a lot more available than you originally anticipated; think of all the things that you have previously invested in equipment-wise rather than the property that you own. That way, you are able to predict just how much you will be able to get, although you will need to speak to the lender in question to get a true estimate of how much you are going to be lent.
Cutting Costs
It may seem obvious to need to cut costs when your spending is going over what you can afford to part with in business, but few people are realizing just how. It may seem like you are doing all that you can to keep costs to a minimum, utilizing all of your staff to the best of their abilities - but this is where the problem actually lies. Instead of using your staff in non-revenue generating jobs such as printing, designing and other such tasks, see how much it would cost you to outsource them to different companies. It may seem like you are paying out an initial fee which would be dragging you further into debt, but there needs to be an initial payment made to save on precious time that could be used to its advantage rather than for drab little jobs.
Online Funding
The great thing about the internet is that there is always going to be someone, somewhere in the world, who has hooked up online and seen what you have got to offer - and actually wants to invest in it. Whether it’s due to the fact that they’ve got a personal affinity for your product or skilset, or maybe they want to get further involved in what you are presenting; either way, the fact is that the money is there and they are willing to invest it into you. You can get funding from sites like Crowdfunder and Kickstarter, although you will have to put across a reasonable pitch to be able to justify why you need people to donate their money to you. Usually, to get a higher return on your site, you have to offer something to the people who are pledging to keep your business afloat. It can be something simple that doesn’t take much money away from your company, a token gesture to show that you appreciate what they are doing, or it could be something a bit more significant depending upon your budget and how much you have got to spend on gifting. The main benefit to this is that you don’t have to promise any percentage of your company to those who are willing to spend on it; there are no shareholders or stakes that have to be parted with as a condition of them giving you their money. At least, not if you wanted to - but this is also a good idea if you are that way inclined, although it may be worth waiting until your company is at a strength point where the shares will sell for a profit.
