In an Economic Downturn: Strategize.

It’s not enough to know that you need funds, or even the amount you need and how the funds will be used.  You need a strategy!  Americore helps business owners every day to strategize and grow their businesses.  Here, Americore offers brief insights on strategic approach to growing your business even in a downturn, regardless of whether it is small or large.  If you want to know more, Contact us or call us at (747) 224-8110.  The conversation will cost you nothing, and can open up new opportunities for you.

Usually, obtaining business funding is associated with start-ups, but established businesses, especially in the era of COVID-19 need to focus on this aspect of business too.  After all, funding is what allows you to expand, add staff, procure new machines or stock to raise production, become more efficient, or just increase sales revenues.  Due to a number of recent changes, getting started can be complicated.

Whether you opt for crowdfunding, or traditional loans, there is a lot of competition for the funds, and your chances are much better when your strategy is strong and well defined. Successful companies dedicate themselves to missions and values that make them stand out from the competition and seem disruptive.  Here is a checklist of things to redefine today in your strategy:

1. Figure out how to acquire customers in a downturn.  This can be a great time to assess opportunities. In the COVID dip, many manufacturers switched to PPE, or medical clothing, masks, sanitizers and more.  The changes had to be made quickly, and those who did, made a better living than others.  But there are other needs people have due to changes in work and lifestyle.  There is a higher demand for home delivered meal kits, groceries, and take out food, virtual meeting supplies, apps, home office furnishings and renovation materials for home office spaces.  How can your business cater to the new business environment, and what do you see as potentially in demand during this specific  economic downturn?
2. Determine what you need to answer that consumer demand, and then you will need to determine how to fund those changes.  If you need equipment, what is the cost, where will it go and who will run it?  If you need stock, will you manufacture it or buy it?  What is the cost, and do you have the space to display or stock it?
3. How will you fund your interim and long term needs?
   1. For small funding needs, you could use a credit card,  HOWEVER,  this is not usually a recommended action due to high interest charges and damage to your credit standing.
   1. Pledge some of your future earnings.  This is also known as Cash advance and while it can be useful, it must be looked at very carefully due to the high cost of the funds, and the limited cash flow until it is paid back.
   1. Attract an Angel Investor. When you business idea is novel and your plan extensive, you may be the right candidate for an Angel investor who is interested in funding you under nontraditional terms and eligibility requirements.
   1. Secure an SBA Loan.  This is the traditional approach, but funds are running pretty low due to a surge in demand.  It is worth asking, but be prepared to have an alternative plan ready.
   1. Raise money from your “circle of influence”. Talk to friends and family about your business and see if anyone is interested in investing in you.
   1. Try a peer to peer lending site.  Through an online site, your business is matched to a lender.  The costs vary, so you will need to review any offer thoroughly.
   1. Join an incubator.  It will cost a small percentage of equity in your company but will yield between $20,000 and $120,000 cash or convertible debt.
4. No business strategy is complete without a marketing plan.  In a downturn, determine changing behavior in your consumer base and market to that new buying approach. Many businesses feel they need to reel in the marketing plan during a recession, but it may more important than ever.  People are staying home more and making more buying decisions online.  You need to determine how to help them find you with their new shopping approach and their emotional reaction to the environment.
5. Embrace innovation.  It is one of the greatest ways our clients benefit from working with us at Americore.