Article by BizX co-founder and CEO Bob Bagga was originally contributed to Startup Nation. Read the full article here.
3 Cash-Free Solutions to Startup Growth
You’ve heard it time and time again: small businesses are the backbone of our economy. The U.S. Small Business Administration (SBA) found that small businesses represent 99.7 percent of all employer firms. These businesses have also contributed to 64 percent of new jobs and have paid 44 percent of private total payroll in the U.S. And yet, despite the economic foundation small business owners provide, their companies, along with startups, are struggling to grow and survive.
Before the Great Recession, it was projected that 600,000 new businesses would be created every year. Today, that number is closer to 400,000, and only a small fraction of those new businesses actually survive after a year or two.
Small Businesses and Startups Lack Access to Funding
While there are a number of reasons why entrepreneurs struggle to open shop and maintain a steady business, there is one reason that stands out: new business owners can’t find funding. When startups and small business owners decide to borrow money, it’s because of four main reasons, according to the SBA. They either want to start a business, purchase inventory, expand their business, or strengthen their company’s financial foundation. But asking for financial help to achieve these goals is tough.
Banks don’t like risk. The odds that a bank will take a chance on a new business are slim. In fact, 80 percent of small business loan applications are rejected. Post-recession, banks started to carefully consider the companies they were betting on. Most financial institutions today need reassurance that small business owners will make their monthly loan payments, and without that guarantee, it’s unlikely that banks will offer up a loan.
But 41 percent of small businesses that lack capital are unable to grow. The National SBA’s 2016 Mid-Year Economic Report concluded that there was a 4 percent drop when small business owners were asked if they believed they had adequate access to funding. And when capital isn’t available, they either seek out credit card companies or family and friends who can lend financial help.
Cash-free Solutions to Startup Growth
Entrepreneurs shouldn’t have to seek out credit cards or place financial burdens on family or friends. There are alternative growth hacking solutions that are completely cash-free. If you’re an entrepreneur who’s tired of being rejected by financial institutions, follow these four steps to increase your company’s growth without spending a penny.
1. Upgrade your Business and Life Through the Power of Trade
While exchanging goods and services might not seem like an option in today’s contemporary world, business owners may be surprised by how much their company can grow using this tactic. Today, small businesses can still trade their goods or services in exchange for something that will help them expand their business.
For example, maybe you’re a small restaurant owner that has open seats every weekend. You decide your marketing efforts need to be bigger and better to solve this problem, but you don’t have the capital to fund effective marketing campaigns. Instead of losing sleep at night wondering how you’re going to get that money, you could connect with a small marketing agency and offer free gift cards to your restaurant in exchange for marketing services.
And who knows? Maybe that small marketing agency was experiencing high employee turnover and can use your gift cards for team lunches, a bonding tactic that many companies implement. When entrepreneurs come together to fuel the power of trade, it enables them to unlock their full business potential.
2. Monetize Your Excess Capacity as You Trade
If you’re not a startup restaurant owner who can benefit from the above example, you might wonder, “What on earth can I trade?”
Maybe you don’t sell gift cards or marketing services—but that’s okay. There’s still a solution on the table: Monetize your excess capacity. Small to midsize businesses operate at around 80 percent of their potential capacity, which means that 20 percent of their goods or services go to waste.
Whether you have an empty table in your restaurant, unsold ad space or unbooked hours, a majority of entrepreneurs would love to close that 20 percent gap.
The opportunity to do so is knocking at your door. Instead of offering freebies in exchange for the resources you need to grow, trade your excess goods and services. You are richer than you think; you just have to monetize the right things.
3. Leverage the Strength of a Vast Network of Like-minded People
You’re probably familiar with the tried and true saying, “It’s not what you know, but who you know.”
That saying applies here. For executives, generating new business is the most important reason for networking. By placing yourself in environments where other entrepreneurs gather, you open the door to more opportunities and customers. While this seems like an obvious fact, according to HubSpot, one in four people don’t network at all.
This means that many entrepreneurs are not only missing the opportunity to grow, but they’re skipping out on a valuable support system. When you make connections with like-minded business owners and leverage the power of that vast network, you’re finding a collaborative community working together to defeat the odds in order to thrive.
These three cash-free strategies are your hacks to startup growth. Instead of wondering whether your bank loan application will be accepted or why your credit card company increased their interest rates, you can grow your business without involving any cash at all.
BizX can help you do all of these things and more! Read through the 6 ways BizX can improve your business on our blog!