Business Tips for Surviving the Financial Crisis, Part 2 of a Series

In today’s economic climate banks are either cutting back on lending or just not lending altogether. When they are lending, they are making it difficult for businesses even with excellent credit to get a loan. Some may dispute this claim so I am including links to sources below that document that this is happening.

This makes it tough for businesses to get by; many have difficulty in meeting payroll, or working with vendors to get supplies they need to stay in business. It becomes especially tough for businesses when they are working on various types of terms that requires them to have some time pass before being paid, such as 30 Day Net Terms which is the most common.

All of this makes for a great environment to become creative, in both acquiring new money or investments for your business, and finding was to increase your cash flow.

Remember that others are also having difficulties and finding ways to increase your cash flow, may also help you increase customer loyalty and the competitiveness of your business as well. One of the things you can do right away to increase your cash flow is offer a discount for clients who pay early.

For instance if you complete some work for a client, especially one that you may have had for awhile you can offer them a 10%, 15% or even a 20% discount if they pay within 10, 12 0r 15 days of receipt of your invoice. How you set this up will be up to you to work out the numbers, and of course it is important to remain profitable at the same time. Many businesses, especially in these times will jump at the chance to save a little bit of money, and this will get your business increased cash flow.

Another creative financing method that will increase your cash flow over time and potentially increase profitability is to offer clients an option of making monthly payments overtime and charge interest. This offers businesses on both sides some positive incentives during tough times. Your client has an increased chance of paying in full with lower payments. It will look better on your profit and loss statement since you are taking in money every month and will slightly increase your profit over the long term.

When offering these types of credit extensions to your clients it is best to get some money upfront, and offer to start the payment process on the balance once the work is completed. For instance, you may want to get a third of the total cost up front and collect payment on the other two thirds. Though you will need to find what works best for you.

If you have difficulty in getting a loan from a bank for you might want to try some other sources of financing for your business. For instance lending has not completely dried up, but banks have different requirements now for lending money such as higher down payments, as much as 30-40% sometimes even as high as 50% in some cases.

If the only problem you have is coming up with the funds for a down payment when it comes to your business getting a loan you may want to consider selling a stake in your businesses or having someone invest in your business to raise the capital you need. I have personally seen this done quite a number of times successfully.

If you really have a need to raise capital and have exhausted all of your other options there are still ways you might be able to come up with the funds you need, (I will be including a large amount of links in this post for further reading on ways to raise capital for your purchases). One example of how to do this I am taking from the links I have below. One woman that owned a chocolate factory reached out to her community to raise funds to purchase an old abandoned building, and also used community volunteers to help her fix up the building to keep renovation costs low.

This same woman also sold $100 gift certificates, to raise money to buy new equipment and gave away $25 worth of chocolates with every $100 gift certificate purchased. She raised $5,000 in two weeks.

If your business needs to buy equipment, you may be able to get a better deal looking for a larger similar business that has the equipment you are looking for. You may be able to get a better deal by offering to purchase their used equipment (in good operating condition) which may be depreciated by the current owners.

The bottom line is that you need to be both creative and innovative in looking for ways to raise capital, purchase equipment and increase cash flow. I have included links to other resources and stories that you may find useful, and give you ideas.

One final note, in an effort to help out other businesses we would love to hear your stories on how you are being creative to get your business through this tough time. Share them with us and we will post some of your ideas here.

Banks Not Lending, In Violation of Law?

Banks Still Not Lending

So When Will Banks Give Loans?

Banks Tighten Lending Standards

When The Money Tree Looks Dry

Get Creative with Your Financing Strategies

Capital One's CIO On Business Strategies for Tough Times

Business Owners Seek Creative Financing Methods

Eight Creative Financing Methods

Street Smarts: What the Financial Crisis Means for You

15 Creative Ways to Raise Money for Your New Business Venture

Raising Cash for a Fast-Growing Business

How To Land a Bank Loan

Eight Places to Get Financing

I'll make the next post in this series next week. View Part 1 of Business Tips for Surviving the Financial Crisis.

Earthquake Hit Indonesia Monday, Measured 7.5 Magnitude

On Monday a large 7.5 earthquake hit the Indonesian island of Sulawesi, leveling approximately 10,000 homes, and injuring about 150 people. Also reported are six deaths at this time, though reports are still coming in. The quake was originally give a magnitude of 7.8 before being downgraded.

It seems that the large quake is not getting much attention due to the world wide Financial Crisis.

While there was an initial tsunami warning it was canceled a short while after the quake. I beleive they have had two aftershocks measuring around 5.5 in magnitude though I can only confirm one at this time.

I will make some updates if I can get more information soon.

Here is a post I did this past spring with some earthquake safety tips, it is always good to keep these in mind when living in or visiting an earthquake prone area.

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Business Tips For Surviving The Financial Crisis, Part 1 of a Series

This is the first in a series of posts I will be making on doing business during tough economic times. Hope you enjoy reading and that it will help you see your business through this financial crisis.

Let’s face it, times are tough, and they will get tougher as the financial crisis we are in will likely get worse. Even if the bailout works, it will take months, if not a year or two before we start to see a positive impact, perhaps even longer if decisions made make the crisis worse.

During a financial crisis, as with other calamities businesses need a plan in order to see the crisis through. There are many things businesses can do to take action in order to survive the tough financial times ahead. Some of these decisions will be hard calls to make, such as worker layoffs or declaring bankruptcy, (Chapter 11) which allows for restructuring.

One thing that is important to remember is not to have knee-jerk reactions or make sudden decisions without thinking them through which generally will cause overreaction. Overreaction will require further steps to correct any bad decisions and may also lead to overcorrection.

The second thing you will want to avoid is not taking any action at all. Act, but act decisively with consideration about how each action will affect the business both in the short and long term.

Another thing to consider which you can act on immediately without incurring any costs, especially if you are operating as a sole proprietor is to treat the business as a complete separate entity. Larger businesses do this without even thinking about it, but small businesses run as by sole proprietors have a different structure and often do not think in these terms.

The reason you want to think in these terms, is you want to ensure the survivability of your business, and you need to start thinking in terms of its survival. The only time you should not be thinking in these terms are if you are going to sell it off, or simply just end the business. I won’t touch on these topics however.

Since the crisis will likely deepen from the lack of lending, and extend to credit cards, and other areas of our economy. Our next post will be about creative financing for your business, and will include ways to come up with cash, increase cash flow, and make smart cuts that will lessen the amount of money leaving your business. In these posts that follow on this subject expect lots of links for your reference and more content than I typically place into a single post.

The next post in this series will come later this week, for now take some time to watch two videos below from Mike Michalowicz a very successful entrepreneur, and author of The Toilet Paper Entrepreneur, the tell-it-like-it-is guide to cleaning up in business, even if you are at the end of your roll. After the video's check out his site.

Start & Grow a Healthy Business in a Recession from Toilet Paper on Vimeo.

Entrepreneur Strategies For Growing In The Down Economy (Part II) from Toilet Paper on Vimeo.

Privacy Concerns Raised With Google Flu Tracking

Last Week we did a post (Google Announces Flu Tracking Capabilities, May Predict Outbreaks Before CDC) on tracking flu trends after Google publicly announced their capabilities of tracking the flu, and possibly warning of outbreaks weeks ahead of what was once possible using other current modeling methods.

A few days later privacy concerns were raised in the news, though these concerns are not really warranted since personal data is not relayed to anyone.

Basically Google uses specific search terms in geographical locations and uses the search terms to populate a map based on how many other searches for related terms are occurring in that area. Though there is slightly more complicated than this, this is how it works in a nutshell.

Google, in now way makes the data of those performing the actual search available and this technology is much needed, especially with the possibility of an outbreak of avian flu occurring.

The CDC is on board and assisting with the use of this tracking technology and if it has the potential to possibly stop an outbreak from spreading unchecked then I am all for it.

Here is the privacy statement from Google on this technology:

Protecting User Privacy

At Google, we are keenly aware of the trust our users place in us, and of our responsibility to protect their privacy. Google Flu Trends can never be used to identify individual users because we rely on anonymized, aggregated counts of how often certain search queries occur each week. We rely on millions of search queries issued to Google over time, and the patterns we observe in the data are only meaningful across large populations of Google search users. You can learn more about how this data is used and how Google protects users' privacy at our Privacy Center.

Use of WMD's Specifically Chemical Weapons By Terrorists Inside The United States May Be Imminent

Weapons of Mass Destruction (WMD) are in the hands of terrorists and have been used for some time in attempts to cause wide spread destruction and instill fear.

May 16,2004 marks an ominous day in the war on terror. For that is the day that terrorists first used a chemical weapon in battle, and used by a non state or in other words not by a direct Government.

Though this incident only caused a "slight exposure" to two Unites States, explosives ordinance disposal technicians, it was designed to kill thousands. Had this weapon gone off as intended it would have spread a fatal cloud of GB (Sarin) over a dozen city blocks and would have caused the death of Iraqi civilians, and 3,000 coalition troops stationed nearby at camp Victory. The 155mm shell contained one gallon of the agent, though it was not known at the time.

Since May 16 2004 there have been at least six other attacks against coalition forces in which some chemical agent was involved. All were WMD's of Saddam Hussein's pre-Gulf War arsenal.

In 2005 U.S. troops conducted a raid on a warehouse in the city of Mosul. During the raid they discovered a weapons factory that held 1500 gallons of chemical agents and precursors to create more weapons.

On February 23, 2008 truck bombs containing chlorine gas were detonated inside Baghdad. The poison gas and blast effects killed more than a hundred people.

Al-Qaeda is determined to use these agents against the United States and many security experts and myself feel that such an attack is inevitable.

The terrorists have been experimenting and using various chemical weapons in attacks and are honing their skills and studying the effects of these attacks as well.

Off-line Source: Pfarrer, C. (2008) Iraqi Weapons of Mass Destruction In The Hands Of Terrorists. The Counter Terrorist, 1(4) 16 Nov. 2008

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