3 Tips To Boost Small Business Working Capital

Dear Debra: I left a corporate job to start a small business. I’m an event planner. I love it. What’s rough is having enough cash to do everything I need to do, including paying a small team so that I can delegate and grow. My business doesn’t qualify for a bank loan. My credit cards are almost maxed out. What can I do? –Passionate on a shoestring, 32

Get around your credit crunch by increasing your working capital and cash flow using these 3 power tips:

1. Require payment for services and product up front. This includes high-ticket consulting fees. I use this strategy myself, and have billed, in advance, as much as $12,000 to one corporate consulting client. Of course, I do back flips through flaming hoops to over-deliver. I'm able to focus 100% on delivering dazzling results because I have the peace of mind knowing that I have zero accounts receivable problems and never have to chase down a delinquent client. This strategy also gets rid of tire kickers who try and squeeze you for free advice or discounted services.

2. Make it easy on clients to pay by setting up a merchant services account with your bank so that you can accept all major credit cards. I’m talking about those little credit card terminals you see in most brick and mortar stores. You'd be amazed how many otherwise sophisticated small business owners and consultants don't even know that this is an easy option or have never considered setting up an account. Negotiate with your bank and shop around for the best rate you can get on the percentage you are charged when you accept credit cards. Complete your application today. When clients book business over the phone, say: “My policy is payment in advance. Would you like to pay with credit card over the phone, or mail me a check?”

3. Raise your rates today for new clients. Charge in the high-end of your industry’s range—even if you are a new business; don’t lowball yourself (women entrepreneurs tend to undercharge). Send existing clients a friendly notice that, effective 30 days from now, your new rates will be $XXX.

Comments

[Heather White]

Debra,

I love and agree with all your advise. I faced the same challenges when I left a corporate job and started my own business. Building business with client money is definitely the easiest way to get around the need for capital in order to grow. Thanks for the great advise!