If you are facing a cash crunch situation, especially if you are a startup, a mindset shift is required
By: Hitesh Khan/
We are conditioned to begin the process of looking for new business opportunities by asking: “Where is there a gap in the market and how can I fill that gap?” A gap could be an unfilled customer need or a new invention yet to be brought to market.
Next, we establish a goal to create a venture that will fill that gap. We consider the resources necessary to make our goal a reality and go out in search of those resources. We write a business plan and present it to potential financiers with the promise of a return on investment.
If the financiers like us and like our idea, they provide us with the capital to start the business. If not, we are stuck. Most times, people find it difficult to raise the resources they require, causing the entire project to fall on its head.
There is an alternative route to creating a new venture. Instead of starting with the question, “Where is there a gap in the market and how can I fill it?” ask yourself, “What do I have and who do I know?”
Carefully examine the resources and relationships over which you have influence, and consider how you can put these to work quickly and effectively to create an offering that the market needs or wants. You can experiment using different combinations of resources to test how the market responds to different offerings and over time create an offering that is really valuable to others.
With this approach, an entrepreneur’s goals emerge over time, taking resources, connections and contingencies into account.
They are not fixed at the start of a project as they are when the traditional approach is applied.
Here are some principles and guidelines that will provide you with a better chance of effectively launching a business when you are facing cash crunch.
1. Start with what you have
At the outset of looking to start a new business while facing cash crunch, take stock of what you have at your disposal. Consider your:
- Skills – what can you do?
- Experience – what have you done in the past?
- Knowledge – what do you know?
- Tangible resources – what do you own and what do you have access to?
2. Take into account who you know
What you have needs to be combined with who you know for it to have real power. Take stock of the relationships you have with others, map out your network of connections and consider how your connections could enable you to use what you have more effectively.
3. Invest what you can afford to lose
There is a big difference in your mindset if you start with the perspective that “I am investing this amount and I expect a 30% return” versus “I can afford to lose this much, therefore I will put it into the business and see if I can make it work”.
If you have only put in what you can afford to lose, you maintain flexibility in the business and minimise stress in managing it. If you are only willing to invest when you expect that you can get a specific return, there is a strong chance that you may never take the leap and launch the business you always dreamed of owning.
An example of this is the entrepreneur who refuses to leave a well-paying job until he finds an opportunity that he predicts will pay more, versus one who decides to invest a small portion of her savings and two years of her life in a project that she believes is worth that amount of time and money – irrespective of whether it will pay more than what she currently earns.
This is one good reason why those having cash crunch should never not consider using a personal loan to finance their businesses.
4. Experiment and adapt
With this mindset, flexibility and adaptability are a competitive advantage. You succeed not by becoming too fixated on a single goal or outcome but by being responsive to changes in the environment. Existing firms typically take longer to adapt than new firms because they have more incentive for things to remain the same and they have established routines and practices that reinforce the status quo.
New firms are not tied to the way things have always been done and thus entrepreneurs can benefit from shifts in consumer preferences, or shifts in technology or changing legislation by realigning their businesses to take advantage of such developments.
If you want to expand your business but is having cash crunch, you should speak to loan specialists. Loan specialists can set you up on a path that can get you the best business loans in a quick and seamless manner. Loan specialists are able to not only pre-qualify you with multiple lenders and compare rates and terms, they are also able to get you the best personal loans which has costs and payments that fit into your budget.
To lower the cost of borrowing, try to convince your lender to give you a better rate. You should negotiate with your lender and they may be willing to cut the interest rate to secure your business, and so the loan will cost you less. If you are uncomfortable about negotiating, you should engage the services of a loan specialist.
Loan specialists will not only be able to negotiate a better rate for you, they will also be able to help you compare the best personal loan offers from among the different ones given by the many banks. It also makes sense to engage loan specialists because their services are usually free.