What to do in your business when you need a lump of cash fast

I had a call this week from a business person who is in her first year in business. She is very close to breaking through but has run out of money. She needs to buy more supplies to keep going but to do that she needs to come up with the cash equivalent of six weeks of her current revenue within the next two weeks.

So what are her options?

a) Give up and go home

b) Find a way to get the money

She is determined not to give up so we had a bit of a brainstorm about how she could raise the money in two weeks. Her constraints are that she is young/inexperienced and has no major assets. Her strengths are that she is very focussed and her business is already making quite a few sales.

Here are the three main ideas we discussed:

a) Sell a bit of the business (take in a partner)

b) Borrow some money

c) Make lots of sales

The pros and cons of each one (as we saw them) were:

a) Selling part of the business: disadvantages around loss of control of part of her business, no current buyers in the pipeline so a big challenge to find one and get them to hand over money all in the next two weeks. Advantage is if she gets the right partner she picks up some extra skills, and the money doesn’t have to be paid back. Overall probability of success in this timeframe = 2/10

b) Borrowing some money: disadvantage that she will have difficulty getting bank finance without any assets, and that the money needs to be paid back. Possibility of borrowing some private money but she’ll be paying top dollar for it if she does. Overall probability of success in this timeframe = 3/10

c) Make lots of sales: Risk is that if she just brings sales forward rather than creating new ones she will just push the cash flow crunch out for a month. So for this to work she would need to find some brand new clients and get them to buy from her. Fortunately she has some stock she can sell which won’t affect sales of her main product. Overall probability of success in this timeframe = 6/10

So she has come up with a plan to bundle the existing stock into an unbelievably good offer for new customers. She has worked out how she is going to make contact with those people and how she is going to create and distribute a marketing piece which creates a deadline for the promotion.

Gotta give her credit for being able to get stuck in when the chips are down! I’ll keep you posted on how she goes.

Edit: She did it 🙂