Small Business Financing Problems and How to Solve Them

Many, if not most, small businesses will experience financing problems at some point during their life. How well management deals with these problems will go a long way to determining the ultimate success or failure of the business. There’s an old saying in business; “Cash is king”, and so it is. There are many instances of businesses being profitable on paper only to be unable to sustain operations due to poor cash flow management.

The financing problems created by improper cash flow management are ranked high on the list of problems faced by business owners. In fact, the 2007 Small Business Survival Index ranks financing problems up on the list of small business problems along with taxes (which can create financial problems of their own), government regulation compliance, legal threats, and finding quality employees.

If your small business is experiencing financing problems, what can you do to solve them? You have several options. You can bring in more revenue, reduce expenses, or become more efficient at managing your cash flow. In most cases you would better served by doing all three. Let’s look at these solutions and how to achieve them.

Increasing revenue is certainly a worthy goal of every business, but may not in itself lead to a solution for your small business’s financing problems. This is because in many cases additional funds are necessary to support the larger operations that create the additional revenue. For example, if you have a contracting business, you’ll need more staffing to take on additional work, which will lead to a short term cash flow problem until collections catch up with your increased labor costs.

This can be seen for manufacturing businesses as well. As your business grows and production levels rise, your business will incur additional plant, equipment and labor costs to support the larger number of orders you’re receiving. Until your receivables catch up with your increased costs you will have financing problems.

This means that increasing revenue isn’t always a solution to cash flow problems,and can actually exacerbate them. Increasing revenue to solve small business financial problems is desirable in the long term, but will only help in the short term if the revenue increase can be obtained without substantially increasing costs or if your business operates on a chiefly cash basis. If you extend credit to your customers, the additional costs required to grow your revenue can easily lead you into a cash position that gets worse before it gets better.

What about reducing costs as a solution to improving financing problems? For most businesses, reducing costs, if it can be achieved without reducing revenue, or reducing costs associated with unprofitable revenue is of utmost importance. Not only do costs directly impact the bottom line, they can reduce the operating efficiency of the business, large or small. Traditionally the largest business expense is labor. While this rule isn’t always true, the majority of business owners can attest to the fact that labor costs are what keep them awake at night. The problem is reducing labor costs while protecting revenue.

The other cost that is especially troubling for many small business owners is taxes. In fact the American Institute of Certified Public Accountants (AICPA), who would be a position to know about such matters, ranked taxation issues as one of the three leading causes of small business bankruptcies. Reducing the tax burden by any legal means is vital to the long term success of your small business. This alone can reduce your financial problems to the point where cash flow problems disappear altogether.

Many small business use some form of financing to finance growth or smooth out the bumps in their cash flow picture. Weather the cash flow problems are caused by expanding operations, inefficiencies, or seasonal business cycles financing is another valuable tool available to the business owner to solve their cash flow issues. Financing solutions for small businesses are available in many forms, including lines of credit, loans, and additional investment provided through either equity or debt financing.

No matter the other problems faced by your small business, it’s clear that financing problems will always rank high on the list of problems faced by small business owners. It’s how well you deal with these problems that will determine the success you experience in your small business.

How to Easily Generate Home Based Business Leads

As the current economic climate becomes more unstable, many are moving towards home based business opportunities. It is critical that these individuals learn to effectively generate home based business leads. The difference between thriving or dying in today’s competitive market hinges on the ability to consistently generate leads for the business. While advertising and marketing for a small business may share some similarities to that of a major corporation, the methods and strategies used are very different.

A home business owner should start with a thorough knowledge of their target market. For example, an understanding of the primary customer base would be critical for a cake decorating business. This target market might include: engaged couples, parents with young children and civic organizations who conduct regular fund raising dinners. A thorough understanding of the target market will help guide the rest of the lead generation process.

Determining where to connect with the target market is the next consideration of the home based business owner. In the example of the cake decorator, let’s assume the business owner has decided to target the wedding cake segment of the market. The business owner would look for points of connection where engaged couples would be researching wedding preparations. Some of these connecting points might include tuxedo shops, wedding dress shops, limousine services, DJ services and local churches.

The next element in the lead generation strategy is a creation of awareness. This would be accomplished as the cake decorating business is introduced to key people at each of the aforementioned connecting points, as a resource for couples planning their weddings. An offer to cross-promote the business of the other would be appropriate. As part of this cross promotion strategy, it would be appropriate to leave brochures, business cards and even photographs of cakes to give a sampling of the home business owner’s work. To put some real power to the home based business lead generation process, the owner would actually take a sample of one of their cakes as a “gift” for each of their connecting partners. Creating synergy with other business owners is the key to making this strategy successful. When a strong impression is made, these connecting partners essentially become a volunteer sales force to the target market on behalf of the home based business owner.

Offering exceptional value is critical for generating leads for your home based business. A small brochure on the top 10 mistakes to avoid when planning your wedding would be of great value to the target market. Distributing this brochure at the connecting points and including a tagline, showing the information being provided courtesy of the home based cake decorating business. Creates value and personal branding for the home based business.

The strategies mentioned above involve localized, face to face marketing techniques. Consider a variation on the previous strategies when dealing with a business that is using the internet for generating home based business leads. For example, a home based business that sells cleaning products would utilize the same principles for identifying a target market. In this example the business owner has chosen to those looking for environmentally friendly cleaning products.

The business owner would begin by finding online connecting points. A great starting place would be community groups that deal with “green” living. As the business owner interacts in the community, they would include their website in their forum signature. The business owner would become part of the life of the community by making regular informative posts that discuss the benefits of using organic cleaning products. Additionally, the business owner would want to create a small report listing 5 things to look for when choosing environmentally friendly cleaning products. The report would be offered freely to anyone interested in receiving it. This online report would have a tagline indicating that is being provided courtesy of the cleaning products business. Those participating in forum discussions with the business owner and those requesting the free report are all examples of home based business leads that have been generated from taking a few small steps.

Relationship building is the key to generating home based business leads in your marketing efforts. These strategies can be implemented for both online and offline home based businesses.

Small Business Networking – 7 Essential Factors of Generating Business Leads

Network is and always will be about building relationships. Too many people make the mistake of believing that it’s about only building business leads or selling products. While this is what drives us to improve our networking it shouldn’t be the only thing.

When done well, and done properly, networking brings together 7 core ingredients or factors that make your outreach more successful. This combination, with no factor being more important than another, will help you master the art of small business networking and as a results – you’ll generate more quality business leads. The important thing is to focus on the individual and the relationship – the rest will fall into play. Start by working on these 7 factors.

Personality

When you first approach someone to begin a networking relationship you need make sure that you will communicate effectively and openly – that means being authentic. Show that you’re enthusiastic and genuine while expressing real interest.

Body Language

Respect the personal space of the other person while standing tall and holding your position in a conversation. Make sure your body languages gives off the overall perception of being confident and assured. Don’t try too hard to appear confident because it’s equally important to appear relaxed – above all else you need to “look comfortable in your shoes”.

Interest

One of the ideal ways to show that you’re interested in what someone else has to say is to listen carefully and ask appropriate questions during the conversation. When you stay engaged it inspires a contact to keep talking. Genuine interest (or the impression of it) is a great way to foster business leads.

Focus

When conversation runs all over the place while talking to business leads, it’s hard to make the discussion memorable – especially when it’s just a bunch of small talk. Focus the conversation onto one interesting topic that a contact brought up. Expand on it and explore.

Connection

During the conversation you’ll likely come across topics of interest. Grab those because those a strong connection points. This flows back to the point of Focus. When you find a topic that resonates with both of you (or everyone in the conversation) use that to cement the relationship for a better chance at building good business leads

Visualization

It might sound like something out an alternative wellness book or self help guide but when you’re networking and trying to build relationships with business leads you should visualize a successful outcome. When you’re positive, there’s a better chance for a positive outcome and it shows in your body language.

Invitation

As you build on the relationship with business leads, don’t forget to follow up. You don’t have to offer an invitation immediately but be sure to follow up quickly with an offer for a meeting, coffee, etc. to hook up and talk shop – or simply to keep the personal conversations and interests flowing.

Small Business Marketing Ideas: Marketing Strategies to Convert Leads to Sales

The art of marketing for a small business is not just getting tons of leads, but also converting leads to sales. A business with lots of leads and no sales, is soon out of business.

Over the years, I have discovered several very effective techniques to converting leads into sales for a small business. Let me share with you a handful of these. To make them easier to digest, I have broken them into two categories: lowering barriers and increased marketing.

LOWER BARRIERS. This means remove the walls that stop your clients from buying. Each business will be a little different, but here are some of the most effective ways to remove the barriers to purchasing:

  • Give a Guarantee
  • Payment Plans
  • Testimonials
  • 3rd Party Documentation
  • Competitive Pricing
  • Increased Expertise
  • Increased Value in your product
  • Samples

INCREASED MARKETING.

  • Compelling Call to Action. Having an offer is not enough, offer something they can not resist. Beware though, don’t make it too good to be true.
  • Unique offering. The more unique your offering is, the harder it is to compare to others and less competition you have.
  • Niche Marketing. When marketing to a specific group, like real estate agents, you can quickly separate yourself from all others effectively reducing your competition and making you the only option.
  • Effective Follow up campaigns. Most people do not buy on their first exposure. Without an effective follow up campaign you can find yourself having very low conversion of leads to clients. Using an email campaign or postcards to follow up can drastically increase your conversion of contacts to clients.
  • Scripts. Using a script for incoming calls, sales calls, common questions, will standardize your business and increase your conversion. This will assure each clients gets the same treatment regardless of the person handling the client.
  • Consultative Selling. When talking with a contact, asking questions and understanding their pain will drastically increase your conversion. Today’s consumer wants more than to just buy a service, they want a consultant to help them make good decisions. Ask questions before offering solutions.
  • Use more emotion. People buy emotionally and justify logically. Help your clients consider how it will feel once they have their problem solved. Use emotional words like, “Won’t you be relieved once this problem is resolved?” This helps them to feel better and creates an emotional satisfaction for your client that they can look forward to once you have helped them resolve their problem.
  • Enroll vs Close approach. Since most customers need 5-7 exposures to your product before they are ready to buy, consider your marketing an enrollment process. Help them get educated about your process and then enroll them into purchasing, especially if it is a larger ticket item.
  • Sort Prospects. When talking to a contact, decide if this person is ready to purchase, needs more time / information or is not interested at all. This can be the hardest of all strategies. This comes from know what the buying signs are of your clients. When they are showing buying signs, move them to the buying phase. If they are still pondering, enroll them. If they are really not interested, give them space and time and see what happens.

To get the best conversion, start by adding a few of these strategies to your current marketing mix and monitor your marketing numbers. Track your sales and if your overall conversion of contacts to sales is increased, stays the same, or is decreased.

By using a few of these marketing ideas for your small business you can see an increase in conversion from leads to sales.