IN these days of economic recession, most business owners complain of poor cash flow occasioned by potential customers holding on to their cash, be they salary earners or self-employed, because they don’t know when the next pay would come.
At such times, most businesses suffer and may even fold up if the owner does not think out of the box to keep the head of his business above water.
It is not a secret that most rich people do not invest in just one business, as having a variety of business portfolios is the rational and most sensible thing to do, from which ‘streams of income’ flow.
The advantage is that, let’s say, for instance, that there is an egg glut and the poultry business is not doing well, property may be experiencing a high, same for hotel business and some others.
Now, with such an array of businesses, poor cash flow arising from economic recession may take those businesses down and unless something urgent was done, the businessman is in trouble.
It is a common saying in Nigeria that one needs money to make money. Therefore, using money is the only way to make more money to keep an ailing business afloat and the following steps could do the magic.
- Asking customer to pay upfront
One of the ways out, according to experts, is using Other People’s Money.
Michael Dell, the technology giant, back in the ’90s, while almost running out of business, had to device an ingenious effort to keep afloat.
Dell himself set out to reinvent a positive cash flow for the company by charging customers upfront on every computer ordered. By so doing, the company’s poor cash flow was reversed and he was able to use his customers’ money to fuel its growth.
Your company only needs to stand its ground by insisting that charging upfront is its own way of doing business.
- You can borrow from a bank
With high lending rate operated by Nigerian banks, borrowing may be a difficult thing to do for most businessmen. Unfortunately the options are few and borrowing from your bank is one of the best options, especially if one has been a good and reliable customer.
Your bankers are not likely to turn down your request, especially if your business is a thriving one but only needs a financial push through funding to keep it running.
- Borrow from family and friends
There are times when it is not possible to obtain funds from traditional sources like banks and cash advance companies. At times like this, many entrepreneurs turn to the only other source of money available to them — their family and friends. Borrowing cash from relatives, or others whom you are close to, may sometimes not be a good idea, but once you are able to convince them with a good business plan and the commitment to pay back, you might eventually have your prayers answered.
While telling his story, Africa’s richest man, Aliko Dangote, said he borrowed his initial capital from his father. Many other multi-millionaires also started that way too and you too can.
Be committed to paying back the loan in order not to injure the family bond. Pay back on time, do not over-borrow or take advantage of the closeness.
- Borrow from your cooperative society
In case borrowing from a bank is difficult and raising money through family and friends seems impossible, but you belong to a cooperative society, go for it. In most cooperative societies, the money is repaid within one year, sometimes a little less.
Whichever way the money comes, this all-important lifeline is surely going to insulate your business through the recession.