Financial challenges are a common problem that afflicts most growing businesses from time to time. In such situation, almost certainly the involuntary thought that comes into the mind of the owners or manages is where to get credit facility.
However, in my interactions with tens of successful business owners seeking external funding is hardly the solution.
Majority of them concede that external financing should only be sought to finance growth or marketing, not sorting financial mess already pillaging a business.
The best way to solving financial crisis in a business is to honestly establish its cause so that you can come up with a practical solution.
Most problems in business have to do with either poor management, which include failure to control costs, over expansion, failure to collect receivables and most common low sales or both.
Once you sort management issues, if they are the cause, the next thing is to embark on increasing sales. The best source of money in any running business is always revenue generated from sales. All other measures offer temporary solutions and are bound to fail if sales aspect is not addressed well.
The first step in increasing sales is to increase the leads generation.
In marketing, lead generation is the initiation of consumer interest or enquiry into products or services of a business. This is done through various ways of promotion to reach out to prospects or potential customers.
Secondly turn you prospects into customers by reaching out to them and making the proposition. The more people get to know you and your products the more you will find customers among them.
Thirdly, find out what is working for you and what is not. Mostly not all activities in business generate income for you. It could be that some products, some sales people and some marketing strategies are not profitable. Eliminate such blood suckers and throw your weight into what works.
Thirdly improve your systems to gain from efficiency. Once you select what works, set out strategies to improve efficiency on them. For example you can add value or improve the products that are your cash cow, give your hardworking employees a better remuneration, resources and training to equip and motivate them to generate more.
Fourthly seek ways of increasing the profit margin. One of the most effective ways of increasing profit is lowering the cost of producing your product or service, without decreasing the quality.
If you have to increase the price, then you must justify it by increasing the value.
Finally stay close to your customers; they are the source of your income. Focus on increasing your customer satisfaction so that they don’t find reasons to go to your competitors.
Always remember that customers are precious, hard to find and very easy to lose. It is always cheaper and easier to maintain a customer than to find one.