Before you go down the path of seeking capital from outside your business or borrowing funds, identify any other ways of raising capital. If you need funds then sometimes it’s not a loan that you need.

Identify areas in the business to make savings

There’s a good chance that you can generate at least some of the capital you need by using business savings. If you can generate the cash internally, it’s often a better option that increasing your debt or taking investors on board. Look at how much you’ve got available in cash reserves or what contracts or payments are due.

Then look at ways you can make savings and increase your cash flow, such as selling equipment you don’t use very often (and leasing it when you do need it), cutting down on travel expenses, moving some staff from full-time to part-time roles, re-negotiating deals with suppliers for better credit terms and reducing your own salary.

It’s also important to chase up any late payers. Make sure you have robust systems in place for handling debt and collecting what you’re owed.

You’ll be surprised at how much all these savings can add up, generating more cash in the business that can be used to reinvest in business growth.

Shorten Cash Cycles

Shortening your cash cycle will increase your cash reserves, keeping your business going and providing a buffer in times of financial uncertainty. The longer your business goes without cash, the longer it takes you to pay your creditors, and the riskier your business becomes. Encourage your customers to pay using online and mobile payment options – the cash is then in your account immediately. If you have to invoice, do it immediately and incentivise your customers to pay early, such as offering discounts. You can also shorten your credit terms.

Focus Your Attention on Sales

Increasing sales is one of the best ways to improve profitability and bring more cash into the business. There are a number of different ways you can improve your sales numbers, such as making sure you and your staff are all trained in how to cross-sell and up-sell, investigating new distribution channels like an online store, implementing a professional sales system so that you can track customer buying behaviour and predict their needs, or even look into franchising your business if demand warrants it.

It’s important to remember the 80/20 rule: 80% of your sales will come from 20% of your customers, so look into ways you can sell more to your existing customers while still trying to gain new customers through your marketing strategies.

It’s always worth considering a price increase too. There are ways to increase your prices without losing sales, and it’s something that should be done now and again, even if it’s just to keep up with inflation.

Alternatives to Capital

Before you jump into researching the different sources of capital that are available, first consider the alternatives. It could be that, depending on what your growth goals are, you don’t actually need extra capital, you just need to be thinking a bit more creatively.

Raising Capital to Grow Sales

If your main goal is to increase sales, you don’t always need extra cash to be able to do this. There are other options that can help your sales numbers and it’s worth looking into them before you go borrowing money.

Strategic alliances are often worth checking out. Business owners are increasingly discovering the advantages of joint ventures and strategic alliances and many experts see strategic alliances as one of the best paths to rapid growth. There are many ways in which you can work with other businesses or people, ranging from short-term joint ventures to more formal long-term commitments. You can form strategic alliances with suppliers, with customers or with complementary businesses or with non-profit organisations such as charities. Think of how often you see a Subway attached to a service station.

It might also be worth looking at updating your business model. A change in your business model might help you find new opportunities for growth to increase your business’s revenue. Direct selling is the shortest route between your business and its customers. It involves buying directly from you without any go-between. It’s probably the simplest and certainly the most direct business model.

Like many businesses, you might currently sell some items through the web but is it time to make a bigger investment in the online world? Global e-commerce is rising daily and the opportunities for growth are significant.

Whether you want your goods distributed widely through wholesalers or via carefully selected retailers, the tweaks you can make to your distribution channels are almost limitless. If you’re a retailer, you might consider also selling at the wholesale level, and vice versa.

Raising Capital to Expand

Your goals may be more focused on expanding your business and you’re considering how to increase your capital to do this. Before you borrow the funds you need, consider other ways of achieving expansion.

For example, look into leasing equipment instead of buying it. If you want to boost your capacity so you can handle more orders, that doesn’t necessarily mean you have to fork out for the additional equipment you’ll need – you can lease it. The monthly lease payments are often less than what loan repayments would be. You can also lease equipment only when you need it, rather than having it sitting around gathering dust and being unproductive when you don’t.

It’s also worth looking into contracting out some work, especially for large projects. Contractors will often have all the resources they need to handle work, and when you bring them on board you’re getting access to those resources.

You could also consider forming partnerships to jointly produce your goods. For example, if you manufacture coffee tables, you might align your business with one of your suppliers, making it cheaper to get the raw materials you need.

Talk Through Your Options for Raising Capital

There is a lot to consider when looking at raising capital. To talk through all your options, get in touch with an MBP Business Partner. You can book in a free 30 minute chat with us HERE.

Bootstrapping is figuring out how to reduce the cash you need to start or run your business, by eliminating any unnecessary overheads while finding out who will give you a hand.

If for whatever reason you’re not able to raise enough capital to start-up you might be able to get what you need by ‘bootstrapping’ (finding what you need through unconventional or low-cost methods).

Some Options to Consider When Bootstrapping

Can others lend you what you need?

You don’t have to purchase new equipment to start your business. Think about what items you might be able to borrow over the short term or do without until the business grows.

Draw up a list of your asset needs and make a determined effort to borrow from others what you can while searching online for second-hand items that will save your business money. Are there people you know that are already in business who could lend you what you need?

Call in favours

Time to talk to friends, other business owners’ and family to see which assets, time or money they can help with. It’s a common bootstrapping technique to save money and chances are there is more help out there than you realise.

Reduce your set up costs and overheads

Look at the bare minimum you’ll need for your own living expenses and cut your salary or work for no pay for a time. It’s quite common for business founders to put in this unpaid ‘sweat’ equity to start with.

Look around your home and decide what you can sell to raise the cash you need. If your business is that important to you then sell everything you can.

Harness free

Search online for what’s happening in your industry to see if there is any specific support in your industry.

Find willing volunteers

Tap into any family and friends that are willing to help which could be cash or just a helping hand setting up and spreading the word you’re in business. You’ll be surprised who in your circle of friends will help.

Work from home

Depending on the type of business you’re beginning, you may be able to work from home or use a workspace that costs little or even nothing. There are lots of shared office options and some businesses with spare capacity may rent out their spaces or equipment to save you signing up to long leases or buying equipment.

Harness social media

You don’t need a large marketing budget to build a customer base. The Internet can help you develop a strong presence for free.

Whether you decide to create a presence on Facebook, Twitter, LinkedIn or Instagram, regular interactions and postings are the keys to gaining customer awareness.

Use crowd funding to raise cash

Having gained popularity over the last few years, crowdfunding lets you receive donations on the Internet to help get your business idea off the ground. You can offer people incentives to encourage them to get behind your business.

Some examples include:

Each of these sites has great case studies and examples you can view.

Delay payment

Possibly you can negotiate with suppliers a much longer payment cycle, free trials or a number of months’ rent free in a new lease agreement.

Low cost marketing

Effective marketing can be creative rather than costly. Some ways you can get your brand in front of potential customers include:

  • Email campaigns – as you begin to sell to consumers’ you’ll want to get them coming back for repeat purchases. This is where building an email contact list and sending out regular deals with calls to action can keep your business going.
  • YouTube videos – images can speak louder than words, and video even more so. Whether you’re explaining what your business does or showing how a product works, videos are a cost-effective medium for getting your messages across to your target market.
  • If you sell direct to other businesses then use up some leather and go visit (walk, drive, call, fly). Face to face meetings don’t require an advertising budget.
  • Build word of mouth referrals by actively asking new customers to refer you. Don’t wait for word of mouth to build over time as it tends to be too slow.

In summary outline all the ways that you can save money by first reducing what you need and then from what you can borrow. Spend your time like a currency and do as much as you can yourself (with friends) before you start paying others.

Your next steps

Research your local industry to see if there is any specific start-up grants, subsidies or support that you may be able to tap into and talk to your trusted advisors (like your accountant) if you’re looking to fund from the crowd to make sure you’re doing the right thing.

List everything you need and brainstorm with others how you can get access without paying for it and be confident you’ve accumulated more goodwill than you think; if you don’t ask you won’t get.

Book in a chat with us to discuss your next steps. The chat is free, so is the coffee. We also have access to a range of 50% and 100% funded business services.

Using stock photos for your website or other advertising media sounds appealing, especially if they are free. But before you start taking images off the internet, it pays to understand exactly what the rules are for using stock images. And we’re talking pays because if you get things incorrect, you could end up paying big bucks.

Beginners Guide to Using Stock Photos

Stock photos generally come into two groups: free and paid. Paid images are mostly sold by giant stock image websites. They let you use the photo for a fee, where the fee varies according to the size and quality of the image, what you want to use it for and how often you want to use it.

Free stock images are free to use, but often have specific limitations on them. Not following their guidelines can also prove costly. Here is an explanation of some of the major terminology regarding using stock photos:

  • Rights Managed – this license gives you the ability to use a photo for a specific purpose for a specific length of time. Usually, it is for the sole usage of the image and if you want to extend its use, then you pay.
  • Royalty Free – this is not a free photo, but rather one you must pay for. The term royalty free is referring to a flat rate you pay to use the photo wherever you want, to a set limit.
  • Extended Licenses – should you wish to use a Royalty Free image beyond the limits of what the seller has set, you’ll need to pay an extended license for it.
  • Creative Commons – there are two parts to this. The first, CC0 is where you can use the image without attribution because the owner has given up all rights. The second is CC 2.0 where you can use the image but must give attribution to the image owner.
  • Public Domain Image – this is an old image which copyright has expired, or there are no longer any ownership rights.

The next thing on your to-do list is to find the right stock images to use.

Finding Free Stock Photo Websites

Who doesn’t like things for free, including stock images? Here are some of the most well-known websites which offer free stock images (not Royalty Free, by the way):

If you are happy to pay for a photo, you could try Shutterstock, Adobe Stock or Getty Images. What are your favourite stock photo sites? Let us know in the comments below!

You’ve been chomping at the bit to create your own elevator pitch (or have been told you need one so many times you’ve finally got around to it). Whichever one is you (no judgement), we’ve put together a list of steps to take to help you create your own elevator pitch.

Why Would I Need an Elevator Pitch?

Aptly named as an elevator speech or pitch due to the amount of time you have to talk to someone in an elevator, it’s supposed to be a quick summary of you and your business. The aim of this short blurb is to create interest in what you and your business offer, hoping to get the person to remember and contact you when the right opportunity arises.

Ideal as an icebreaker or for when you’ve been asked to introduce yourself to a group, it is a handy tool to have in your repertoire. Even better, it’s one you can prepare ahead of time and use repeatedly.

Step By Step Guide to Writing Your Elevator Pitch

An elevator speech is around 30-60 seconds long, so writing one isn’t hugely time-consuming. What’s challenging though, is knowing what to put into it and where. Knowing that remember you need to answer the questions about who you are, what you do and what you want to happen after giving your speech.

Spend some time jotting down notes before moving onto the next steps below:

  • Introduce yourself – your name is a given, but also remember to smile and shake hands too.
  • Explain what you do – if you have a job title, here is where you would share it. Also now is the time to explain what you and your business offer. Your mission statement should help guide you here.
  • Discuss how you solve problems – explain the value you and your business offer and how you solve problems.
  • Unique selling proposition – what makes you and your business better than others in your industry?
  • Question time – here you can bring your audience or person into the discussion. Ask them a question related to the problems you can solve.
  • Give a call to action – ask for what you want to happen next. Often this is to contact you but could be to sign up to your newsletter, follow your business on social media or take your business card.

Writing your pitch down on paper lets you get your thoughts together. Doing so also gives you the opportunity to take it with you when you go networking, and also to practise reading it aloud (but not to your audience!).

If you’d like to run through you elevator pitch, reach out to your MBP Business Advisor for a chat. Don’t have an MBP Business Advisor Yet? Book in a chat with the team here.

You’ve got a tight budget, so any free marketing ideas you can use are a huge bonus. Thankfully, you’ve got an awesome business and accounting team in MBP which love nothing more than helping you out…which is why we’ve put together this collection of 12 brilliant free marketing ideas for you!

12 Effective Free Marketing Ideas

Marketing is a great tool you can use to promote your business and attract new clientele. One big problem though: traditional marketing can be very expensive. If only there were some free marketing ideas you could try instead …

Well, there are, and we’ve made a list of 12 for you to try:

  1. Offer a free initial meeting – ideal if you offer a service, encourage new leads by giving them a short 20-minute consultation.
  2. Use social media often – it’s free as long as you don’t pay for advertising! Use the most suitable platforms for your audience and offer a 20/80 spilt of promotion and entertainment/useful help.
  3. Host a free online event or class – give your audience something of value by teaching them something online. You could even do this on social media, YouTube or use free webinar software.
  4. Send email newsletters – send regular newsletters out to those who have signed up for them. Growing your list can be hard, but things such as offering a discount or the chance to win a prize for an email address.
  5. Join a free B2B networking group – there are plenty of both online and face to face networking groups to which you can promote your business within.
  6. Volunteer – giver your time to a local charity, getting your business name out there and growing your brand awareness.
  7. Write guest articles – write articles for other websites in return for them telling their readers that you were the author and sharing a link to your business website.
  8. Enter business awards – look for the creditable and free business awards around NZ that you can enter. As well as helping you focus on your business and receive valuable feedback, you may also be promoted as an entrant or winner.
  9. Ask for testimonials from your clients or customers – use these to help promote your business to your followers. Social proof is a highly effective way of increasing sales.
  10. Create a lead magnet – a lead magnet is something that you give away in order to obtain an email address. It could be an eBook you have written or a checklist on how to do something.
  11. Create a QR code – make yourself a QR code and use it in your marketing efforts to encourage people to follow your brand. Adding it to posters, business cards and on social media works well.
  12. Cross-promote with other businesses – ask another business to shout out to their followers about you, and in return, you’ll do the same for them.

Build A Brand

Finally, spend time focusing on building your brand identity, the major factors which make your business stand out above your competitors. Take a read of our article How to Create a Stellar Brand Identity, and then get in touch to discover the many other ways our business services team can help you grow your business.