How Pity Crowdfunding Increases Business Cash Flow Problems

By | Grow Business

business cash flow problemsMark has business cash flow problems because his company was forced to close down as “non-essential” for months during the 2020 coronavirus lockdown. And when he reopened, many of his prior customers didn’t return to the shop.

Pity crowdfunding is not the solution

As he struggled to pay rent and rebuild his business, a well-meaning friend set up a GoFundMe crowdfunding campaign to help Mark’s company stay afloat.

Despite the good intentions, this charitable effort painted Mark’s business with the stench of fiscal death. Instead of raising the necessary funds, the campaign told past, present, and prospective customers that Mark’s business was headed for bankruptcy.

What should Mark have done instead to fix business cash flow problems?

Sold his products or services in bulk with a discount for prepayment. This would raise funds easier for his business by providing customers something they wanted instead of playing the sympathy card.

This tactic works for both subscription and non-subscription businesses.

If Mark sold a monthly subscription, it could quickly be bundled as a special one-time-offer (OTO) to prepay for a year and get two months free.

If the business does not run on a subscription model, Mark could figure out what the average customer purchases annually of his products or services and offer a similar prepaid offer for 12 months’ worth of these products or services.

Does prepayment for a year hurt future revenues?

Some might contend that’s robbing Mark’s future by getting the cash now.

However, that’s not the case.

What it does is buy the company time by giving it the cash flow lifeblood it needs now. In addition, Mark should have additional capital from these deals to invest in direct response marketing to past and prospective customers to grow his business in the coming months.

The importance of past customers to cash flow

Note the inclusion of past customers.

It’s far easier to reacquire past customers than to convert a cold prospect into a new customer.

Done correctly, Mark will recoup many of these former customers and solve his business cash flow problems. They just haven’t been given the right offer yet that convinces them to return.

Business Social Responsibility And Politics: Are You A Social Justice Warrior?

By | Grow Business

business social responsibilityAre you using your company to promote business social responsibility? Are you committed to social justice? Is your business devoting time and money to your favorite political causes?

Unless your business model depends upon targeting a niche receptive to your Social Justice Warrior (SJW) activism, you’re hurting the company’s prospects for survival.

Of course, it’s heresy to point this out because it offends those who rely upon corporate donations to advance their causes. And their supporters among workers, the media, and politicians.

Fickle Social Justice Activism

Understand this…there’s a SJW narrative that determines which causes and political candidates are acceptable. And that can change daily or even hourly.

Are you committed to what you’re promoting? Or using it as a cynical marketing ploy?

Don’t misjudge the timing or be exposed as a fake.

Because your business can become a villain overnight among those you thought were your allies. Even if the cause itself remains okay, the language you use today to promote it can make your business a pariah tomorrow for being ***phobic, ***ist, “privileged,” etc.

And what about those who already oppose your views on saving Mother Earth? Or voting for Candidate X? What are the chances they’ll boycott your business if they know you’re working against their beliefs?

The Steve Jobs Example

Apple’s co-founder Steve Jobs had this issue pegged.

He definitely had views on business social responsibility and other inherently political issues that he supported. Yet he believed a business’ duty was to its equity owners (corporate shareholders, LLC members, etc.). That’s why Apple was not donating money to social justice causes until after his death.

Does that mean you personally can’t be involved in causes you support? Of course not.

Business Social Responsibility General Rule

But, as a general rule, do it with your personal money and time. Not corporate donations. Don’t turn your company into a social justice machine.

An Exception To The Rule

Of course, there’s an exception to the rule.

What if you’ve found a profitable niche that supports your views? And that niche is broad enough to support your business model? Then it’s okay to associate your company’s brand with those causes.

Niching Ice Cream

A good example of this exception is Ben & Jerry’s Ice Cream. The activist founders sold their company 20 years ago to Unilever. Yet the brand remains synonymous with environmental and left-wing political activism. And there’s a big enough market of true believers in those causes to support the association.

Alienation And Growth

Yet most developed countries contain populations divided on political and social justice issues. Before you devote your business to causes, be sure you’re not limiting its growth potential. Can you afford to alienate half your potential customers because of business social responsibility activism?

Business Failure: When In A Hole, Stop Digging

By | Grow Business

store closing and business failureIf your company is struggling, it’s time to re-evaluate why you own it in the first place. Sometimes you have to admit business failure.

The optimists that preach hopes and dreams are ignorant (or lying) when it comes to business failure rates.

Most business ventures flop. Almost all restaurants and bars close their doors.

Let’s face it. What you do may be simple. But it’s not easy to turn a profit long term.

Bad stuff happens to even the most successful ventures. For example, after the COVID-19 coronavirus shutdowns ordered by government, 47% of small business owners surveyed said they expected close down permanently. And struggling large companies decided to file Chapter 11, knowing they didn’t have the means to continue operating. Some even liquidated in Chapter 7.

Does this mean give up? No.

It does mean you should regroup, check your backup plan, and assess your path back to growth and profitability.

And if there isn’t a solution, it’s time to close your doors. Because there’s no sense in pouring money down a rathole.

Of course, it’s important to note that business failure doesn’t mean you failed. More often than not, something changed that made the company no longer viable. And that’s okay…no matter how painful it might seem.

Because you are not your company. And there will be other opportunities out there for you. Save your time and money for them if your current business has kicked the bucket.

Business Failure: What’s the lesson from a flop?

By | Grow Business

business failureToo many companies go bankrupt because they haven’t failed enough.

Let me explain…

When something doesn’t work out as planned, the entrepreneur often takes it personally.

“I’ve failed,” he thinks.

It’s assigning personal culpability to an outcome that may be beyond the entrepreneur’s control.

Because whether it’s a solopreneur or a Fortune 500 company, it’s the market that determines what it wants. Research and educated guesses can reduce the chance of initial failure but can’t prevent it.

Billions have been spent to polish turds no one wants to buy. And the only failure involved is the doubling down by trying to sell the market what it clearly doesn’t want.

What’s the solution?

Test. Fail. Make adjustments. Test again.

Don’t tie your sense of self-worth or the merits of the business to whether or not a particular test succeeds or fails. You’re testing. Nothing more.

The only time you chastise yourself is when you give up entirely.

Now that doesn’t mean it’s wise to continue testing something no one wants no matter how you repackage or tweak it. It does mean you test to see what works and what doesn’t. If there’s no light at the end of the tunnel, choose a different tunnel (product, service, or market) to test.

If you’re skeptical, look at the startups that grew to have a successful IPO. Every one of those companies had flops, including the FAANG companies. They just didn’t give up because of the flops or spend their time wallowing in self-pity when a test didn’t work out.

So, test and fail frequently. It’s just part of the process of getting to those wins that you want.

Yet you don’t have to spend a fortune in time and money testing to find those wins.

Because you can reduce the amount of skin you have in the game with an idea for a new product or service through a different type of testing called “pretotyping.”

 

How to Raise Fast Cash for Your Business

By | Grow Business

how to raise cash fast for your businessWhether you’re selling products or services, if money is tight it’s time to raise fast cash for your business. Here’s what to do.

The Offer

Create an irresistible offer that saves your customers money if they prepay now in advance for products to be delivered or services to be rendered later.

And if it’s a subscription (e.g. SaaS), you can offer a similar deal if they renew today instead of waiting to the end of the current subscription term.

Essential Elements

The key here is to make it something that’s both profitable for you and provides an incentive for your special deal to be accepted today. Because procrastination doesn’t fill the piggy bank.

Of course, there should be a valid reason why you’re making this one-time offer. For example, when the COVID-19 coronavirus hit, many companies were starved of cash flow during the shutdown. It made perfect sense at reopening to offer a deal that generated revenues quickly.

In addition, there has to be a sense of urgency. In other words, there’s a hard cut-off (deadline, only 25 to be sold, etc.) that generates a fear of lost opportunity if the offer isn’t promptly taken advantage of by the customer.

Who to Target

Remember to focus on existing customers with this special offer for the highest conversion rates when trying to raise fast cash for your company. Because it’s a lot easier to sell to those who have already bought from you than to go fishing in a cold market trying to grow your business.

You Can’t Raise Fast Cash This Way By Looking Like You’re About To Go Out Of Business

Naturally, you don’t want to appear desperate (even if cash flow is tight) because that will turn off prospects. So, it’s important that your offer be credible…and that includes leaving the impression you’ll be around tomorrow to honor your deal instead of closing your doors and stiffing customers who prepaid.