Whether due to unexpected expenses, a decline in sales, or any other factor, emergencies can be extremely stressful for business owners. If you find your business in a financial emergency, you must act quickly and come up with a plan to keep your business afloat.
Over 25% of UK businesses have experienced a financial emergency in the past year. Raising money for your business in an emergency can be a stressful occurrence, but there are plenty of options for you to consider. This article aims to detail some of these options.
Sell Assets or Liquidate Inventory
One option for raising money in an emergency is to sell assets or liquidate inventory. Your assets and inventory include anything your business owns. This can be equipment, vehicles, office furniture and supplies.
Although this will give you some quick money, you should consider the impact it will have on your business operations going forward as you do not want to end up in a downward spiral. Without equipment and vehicles you might be unable to perform your services or complete some jobs.
You may be unable to fulfill existing orders or meet customer demand in the future. For this reason, weigh out your pros and cons before selling assets or liquidating inventory.
Apply for Emergency Business Loans
Emergency business loans are designed to give businesses a quick injection of money in times of emergency. These loans can be used to cover expenses such as payroll, rent, and inventory.
Emergency business loans can be a good option if you have a strong credit history. You may also be required to demonstrate that your business is capable of generating revenue in the near future. However, be sure to carefully review the terms and conditions of any loan before accepting this type of loan. Emergency loans often come with high interest rates, strict repayment terms, and other fees.
Tap Into Your Personal Savings
You may be in the position where you have to dip into your personal savings account or take out a personal loan. This is not always the best option as it could have an impact on your personal finances, leaving you vulnerable in the event of future emergencies. It may also impede your long-term financial goals.
Crowdfunding has become a popular way for businesses to raise money quickly, especially online. With crowdfunding, you can reach out to your community and ask for donations or investments, usually in exchange for perks.
Crowdfunding can be a good option if you have a compelling pitch or an existing audience who would be able to pitch in. You will also need the time and skills to promote your campaign effectively in order to be successful.
Alternative Financing Options
If traditional financing options such as grants and bank loans are not available, you can look at alternative options such as factoring, merchant cash advances, or revenue-based financing.
These options tend to be more expensive than traditional loans but they are easier to get approved for and can provide you with quick access to money in an emergency.
Consider a Partnership or Merger
A partnership or merger with another business could be a good way to raise emergency funds and stabilise your business. You will be able to pool your resources and expertise, which not only helps with your current emergency but could also help ensure your business’s long-term success.