Whenever I have needed money as an entrepreneur, a simple formula has always gotten me out of jams.
First, I will tell you what I don’t do.
If you’re with me after that, I’ll tell you what you should actually do. If you aren’t reading this, then you may read my first list and think it’s the list of what you should do. That’s understandable because it’s a common list of what most people do, including myself when I was inexperienced. I only stopped because it didn’t work, not because it didn’t feel right. I hope you eventually come back because the first rule of making money when you have none is paying attention.
- Focus on money
- Work hard to find new people to sell your product or service
- Pay your bills more slowly to conserve cash
- Incentivize prospects on the fence to sign and pay by offering discounts
- Immediately change your business model and product offering to try and capture new markets that you are missing.
Why? What evidence do I have not to do this stuff?
Here’s a story.
Once, I had just a few hundred dollars of cash left in my business with a 5 figure payroll coming up. Clearly, this is one of those panic spots when you wish you could run out and force someone to sign with you.
The list you see above is essentially what I did to fix my problem. I started getting desperate to get a prospect to sign that had been on the fence. I gave them discounts. I called them a bunch. I thought about their money constantly and how it could solve my problems. What happened was I took a project I should have never taken. The timeline was too short. The money was too low. But I did it. I felt like I had to take it.
We did our best to serve the customer after we got them, but something wasn’t right. I’ve learned if they meet you desperate, they treat you desperate. First impressions set the tone for a relationship.
It ended up costing me much more in the long run in issues than drawing my line of credit and focusing on serving my customers would have.
So what do you do instead?
When you need money, do the following:
- Focus on service and pay attention to every little detail of what’s going on
- Make a list of every customer (put NAMES, not just companies, but PEOPLE who need you), now make a list of their needs, desires, strengths, weaknesses, and things you can do to address them. Now set about helping them above and beyond what you are paid.
- Pay your bills faster than normal. It will feel hellish because you are paying out the money you need to live on.
- Become more strict on prospect qualification and be very very wary of providing any kind of discount and if anything, use this opportunity to raise prices.
- Double down on your most profitable customers and try to learn more about what they are doing and what they need.
Why? Another story.
After I read Emerson’s law of compensation (PDF), I set out to apply it to my business. For those curious, it basically states “If you want more, give more [sic].”
So, I tried it. I started doing more for customers. We started sending update emails when they didn’t ask. Going to their offices and dropping off donuts. Instructing my people to take more blame when things didn’t go right.
I wouldn’t say I stopped looking for new customers completely, but it became a much smaller part of my day.
And what happened? Our business doubled over a period of 6 months. Was I worried about money? Nope. People were flinging money in our faces.
So, when you need money, buckle down. Don’t look for quick fixes. Do the right thing and look hard at yourself and your services and products and try to make them better. Take any people you are currently working with and make it your mission in life to serve them better.
Be patient. You don’t want to solve this problem quickly. Otherwise, it’s going to come back and bring more problems with it.