Mark 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.