For years this has been the most popular post within my entire blog.
Little wonder that is.
For more than two years I’ve championed the concept of growth through leveraging marketing assets that already exist within companies.
Unfortunately this concept is a hard sale to make. Most small business owners and c-level executives I’ve spoken with have convinced themselves that increased cash flow comes from increasing corporate debt.
Now that the credit crunch has hit, a few business owners and executives have begun considering alternatives to financing to increase cash flow. Still though, most remain self-convinced that increasing debt is the way to go.
Well, here’s a truth bankers don’t want businesses to know: business capital doesn’t have to come from third-party sources such as venture capitalists, bankers, or other financiers. And it doesn’t require selling off receivables at some god-awful loss either.
Seems every few months someone makes a comment reflecting they’ve bought into the ‘borrow borrow borrow’ propaganda. For example just last week I was conducting an exploratory session with a new business owner. He had purchased an established but now failing company. One of the concerns he expressed during our session was how tough the credit crunch has made it for businesses to get financing. He was at his ropes end, struggling with potentially going under after just a few months of trying to dig solid roots.
He had spent the better part of his company’s short history chasing bankers and lenders to no avail. Now that the credit crunch had hit, he was suffering. What was he convinced he needed? More debt. His entire viewpoint of cash flow was based on acquiring debt. Finding fast ways to make more money without spending more on ads never entered his mind. And he was resistant to hearing about it. In fact, he argued that nothing would work for his industry aside from making random b2b unsolicited in-person sales calls. What a huge waste of time.
Sometimes There’s Little Choice…
Admittedly, start-ups may not have much choice. Few resources are available to leverage. But for everyone else there are stronger options than making unsolicited cold calls on companies that don’t know you and don’t have or may not have a need or want for what you are selling. There are other options. Grabbing them simply takes a change of viewpoint.
The easiest and fastest way to increase operating capital isn’t to ‘beg’ bankers for money. Really, when it comes to immediately increasing cash flow, business financing should be the last option.
The business owner I was with is not alone in his stubborn views. Most people balk at this thought too. I know. I worked in banking for ten years. I’ve seen the brain washing that takes place.
The idea of leveraging marketing assets never occurs to business people–because that’s the way bankers like it. People have been conditioned by bankers and finance companies to believe money must come from a benevolent (sometimes malevolent) third party.
This is a mindset problem. That’s all it is.
Why Bankers Hate Us…
Imagine if every business on earth suddenly turned their focus to internal growth through improved marketing instead of increased debt. The bankers and business financiers would go crazy. They’d run to you and call you a fool. To them, the one source of ‘sure money’ is them.
It isn’t that bankers are malicious. They have simply received years of internal training (propaganda) that shows them just one way to “solve all problems” — more debt.
It’s like Maslow is reported to have said, to the person who only has a hammer all problems tend to look like nails. To bankers, debt is that hammer. The only tool they have been trained to offer.
Lets be honest. If bankers didn’t take this short-sighted approach fewer businesses would borrow money. And more financiers would be out of a job. Just look at the number of institutions that have gone out of business in the past 5 years. Because of the credit crunch the bankers have had fewer loans approved. So they’ve gone belly up.
So to stay afloat themselves they use propaganda to convince most of the nation that the ‘normal’ way of growing a business is to go deeper into debt. This is a win/lose proposition.
Sure, if you’re just starting out and have zero operating capital and have no relationships of any kind with vendors, clients, peers, or others you may need to consider financing. But still, it isn’t your first option. A better option is to leverage marketing concepts that don’t cost money. Or that cost very little money.
One of the ideas I gave to the business owner I was speaking about, was to leverage relationships with other business owners and decision makers who are in a position to generate immediate sales for his company at no cost to him.
Joint ventures are just one way to go about increasing cashflow. There are hundreds of other ways to increase sales and operating capital through marketing leverage. None of which are affected in the least by the credit crunch.
Plus, leveraging marketing assets frees you from feeling like some second rate citizen begging for money.
So if you are thinking of borrowing business capital, I recommend you put the idea on the back burner for now. Instead take a look and determine if your company can immediately leverage its existing marketing assets for increased capital.
Marketing Leverage Is More Sound Of An Investment Than Hoping To Get Money From A Tight-Fisted Banker or VC — plus you get to keep your dignity
There’s a world of difference between infusing new life into a company through leveraging marketing assets that already exist within a company and giving up full or partial ownership and control of a company through external finance companies or VCs.
I believe that since you’ve read this far you’re smart enough to know that growing a company through marketing leverage is as important to generating immediate cash flow, if not more so than seeking third-party financing. Sure, leveraging debt to increase the size of a company or for general growth can make sense, but not for cash flow. Cash flow is almost always best handled by increasing your marketing results.
Test This And See For Yourself
From time to time I offer general consulting services and custom consulting to address specific marketing needs. Through the consultation I provide feedback and advice specific to individual companies. Small businesses and large.
If this is something you think might appeal to you you’ll want to give us a call. That way we can find out more about your situation and see if we’re a good fit for you and if you are a good fit for us. There’s never a charge for our services if we feel for any reason that we cannot help you.
That way we can work together at increasing your business — without you taking on a penny more debt.
Contact Us For More Information About Our Services
Click the link below to contact us. If we and you both feel there may be a match between us we’ll get in touch with you within two business days.
Note: Generally all consultations must be scheduled a week in advance of the actual consultation date. So, the best time to reach us is almost always well in advance of when you need our help. That way there is plenty of time for us to talk and for each of us to make decisions about possibly working together.