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Financial Alternatives for Small Businesses

Updated on January 10, 2016
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Stephen Bush is the founder and CEO of AEX Commercial Financing Group. Steve obtained his MBA from UCLA and is a U.S. Navy veteran.

Financial Alternatives for Businesses
Financial Alternatives for Businesses

Financing Choices for Small Business Owners

There is nothing simple or easy about running a small business, but there are some practical options for avoiding problems along the way. This overview provides some key examples of financial alternatives for small businesses to consider.

With many of these small business finance choices, suggested actions need to be implemented on a timely basis. Small business owners should be prepared for some difficult decisions along the way.

What about Plan B and firing your banker?

Financial Choices
Financial Choices

Difficult Financial Choices to Find New Business Solutions - New Financial Alternatives to Consider

For at least some small business owners, the financial alternatives shown below might not be the first or even second or third choice to resolve a current business finance problem. But in the current perplexing business environment, these are realistically financing options that could be necessary to ensure the survival of a business. So while some will view these potential business solutions as a "last resort" to pursue only if all else fails, a more prudent perspective is to consider them sooner rather than later because so many banks are failing to provide a "normal" level of commercial funding to small businesses.

  1. Business finance consulting can be an effective first line of defense. Increasingly it will be helpful for small businesses to have an objective and independent expert consultant to guide them through uncharted waters.
  2. Small business cash advances and other non-bank strategies such as receivables factoring for obtaining working capital. Banks have dramatically reduced their programs for providing lines of credit and working capital financing to small businesses.
  3. Be prepared to fire both your bank and your banker. If the current lender is not providing essential business funding, this option assumes an even higher priority.
  4. Contingency business planning that will evaluate which financial alternative(s) should be pursued if and when a preferred financing option is not available.
  5. Reduction of operating expenses for a business. This particularly includes supplier and utility costs.
  6. Business and financial negotiations to improve financing terms and loan costs.

One Choice: Small Businesses Might Need to Fire Their Banker

This is likely to be an uncomfortable financial alternative for any small business owner to consider. Because there continue to be a high number of troubled banks, the FDIC (Federal Deposit Insurance Corporation) could end up firing your bank for you if you don't do it first. The decision process to fire your bank should place particular emphasis on whether the current bank is providing your business with an adequate amount of working capital financing and commercial real estate loans.

Smart Choices: A Practical Guide to Making Better Decisions
Smart Choices: A Practical Guide to Making Better Decisions

This continues to be one of the single best books about making choices at any level. Practical decision-making is truly a "must have" skill for any individual.

What are my choices again?

Plan B Should Be Fired Up and Ready to Go When You Need It

While I think that having choices and alternatives is always preferable, I do find that some people literally hate making decisions. So there might be such a thing as too many choices for some individuals and business situations. In such cases, having a Plan B already in place can be a comfortable strategy even for someone who does not like making decisions because the choice has already been made to go with Plan B if and when something goes wrong with Plan A.

It is important to remember that practical choices change over time. With the recent high speed of changes in many areas like commercial financing and career planning, the alternatives need to be regularly reviewed and revised as appropriate.


Contingency Business Plans

However difficult it might be, the preferred path is to use business planning that reviews practical and timely business financing alternatives well before the actual need occurs. While I have referred to this as a "Plan B" mentality, it is prudent to have a Plan C, D and E as well.

What If Your Bank Says No?
What If Your Bank Says No?

William Ury: A Yes and No Expert

The Power of a Positive No: Save The Deal Save The Relationship and Still Say No
The Power of a Positive No: Save The Deal Save The Relationship and Still Say No

I particularly emphasize the importance of "No" in several of my articles. I have described William Ury as one of my favorite business authors, and he has become famous for writing the "Yes and No Trilogy" about how to use "No" more effectively. I strongly recommend that you read his three major contributions to the world of yes and no. This is one of them (third in the series). The three books can easily be read separately and in any order.

Yes and No Are Always Key Alternatives

There are some very short words like banks, risk and debt that qualify as key words and concepts deserving special attention by small businesses everywhere. But there are two shorter words (Yes and No) that might be even more critical because they represent two of the most frequent choices available to business owners and managers.

There are many daily examples in which small business owners will be much better off if they can master the use of yes and no. Certainly this includes some more obvious examples like business negotiating and communicating, but it does not end there.


Small Business Finance Opinion Poll - What Do You Think?

Whether you personally need help with small business financing or not, you probably know small business owners who might need more financial alternatives and financing help.

Please pick a choice below that best reflects your opinion about the current state of commercial financing for small businesses.

See results
Business Financing Choices
Business Financing Choices

Small Business Finance Choices and Alternatives Are Meaningless When Ignored

Decisions about Commercial Financing Options

To reiterate some earlier points, the current path to success when seeking small business financing is likely to be difficult. Many of the realistic options will be uncomfortable, but the potential cost of not making difficult choices will frequently be unresolved problems for a small business owner.

Understanding Your Business Writing Alternatives

Small business owners are likely to need business writing help with several of the key business problems described in this overview.

Small business owners might need to fire their bank.

One More Thing - The Right Kind of Planning

Contingency plans and Plan B are often forgotten in the rush to get other important tasks accomplished. In today's chaotic business finance environment, contingency planning is more important than ever. This kind of planning devotes special attention to evaluating what to do when or if something goes wrong. Doesn't that sound like a prudent perspective to take in the current banking and financial climate?

  1. "Always have a Plan B."

    While business planning is widely accepted as a building block for small business growth, contingency planning is a more specialized variation that seems to be overlooked more often than not.

It is our choices... that show what we truly are, far more than our abilities.

— J.K. Rowling
Thanks for Visiting Financial Alternatives for Small Businesses — All images provided under End User License Agreement to Stephen Bush
Thanks for Visiting Financial Alternatives for Small Businesses — All images provided under End User License Agreement to Stephen Bush

© 2012 Stephen Bush

And now, your thoughts on the subject...

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    • BuddyBink profile image

      BuddyBink 5 years ago

      Having alternative plans prepared whether for finance, marketing or product/service development just makes good sense. A change of financial institutions makes sense if the current one is not meeting the need. Thanks

    • Virginia Allain profile image

      Virginia Allain 4 years ago from Central Florida

      I think banks have lost a lot of credibility during the financial downturn. Their poor lending practices set the stage for the current problems and now their fear of lending to anyone for anything is keeping the economy stalled and forcing many businesses to close.

    • RetroMom profile image

      RetroMom 4 years ago

      Thank you for sharing this. Very informative for all those business-minded people out there!

    • TransplantedSoul profile image

      TransplantedSoul 4 years ago

      So true - with the capital/support to get going with a project, the project will not make money. Without money, financing is hard - so the cycle continues.

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