Foreclosure Cleaning: How to Successfully Handle Small Business Growing Pains
Too often small businesses get caught in the trap of growing pains. This can include too much work, too fast. Here are some tips to help below.
Cash Flow Hurdle
One of the characteristics of growing too fast is the lack of cash flow. If you’re a small business owner, you may have performed four or five jobs for a company, and your financials may look great — on the books. But in reality, you may not have ample cash on hand to tide you over until you can collect on those invoices.
If you’re working with larger companies, it’s not uncommon for these larger businesses to take one to three months to pay. As a small business owner, what do you do in the meantime? There are a couple of effective solutions; see below.
Solutions to Entrepreneurial Growing Pains
One solution to the cash flow hurdle is factoring. You can factor your invoices. This entails selling your invoices to a company who will pay you the monies owed on those invoices, for a percentage of the amount you are slated to collect.
Advantage of Selling Invoices
The advantage of factoring is the factoring company will pay your company within days for the monies owed you by your client. That finance, or factoring, company, in turn, will wait to get paid. You will be paying the factoring company with the percentage they will collect off your invoice.
There are various pros and cons to factoring, so choose carefully when researching these types of companies. Some outfits will want you to factor all of your company’s invoices through them — even the tiny ones that you may not want or need to filter through their financing.
Others may ask for large percentages and may want to lock you into a contract with particulars to which you may not want to agree.
Do your research and choose your factoring partner carefully.
Turn Down Work?
A second solution to growing too fast is to simply turn down work. Yep; turn down jobs. While this is not ideal for many new companies, it may be your best bet in the long run. Why? Because it really you’re your company no good to accept all the work that comes in if you’re too busy to handle these jobs effectively.
You may ultimately complete all work orders given to you — but you may not do a good job. And if this happens, you will have lost a potential long-term client and stream of referrals after your first foreclosure cleanup job with that business.
It sounds much better to tell a company you are simply too swamped to take on more work right now. This sends a signal that you do “good work.” After all, if you’re swamped, you must be good, right?
Other Small Business Growing Pains Solutions that Bring in Money
Another solution, so you don’t have to ultimately turn away work, is to use other companies to do the work for you. You can still earn from these jobs. Here’s how …
To make money from jobs you don’t do yourself, you can farm work out. You can send work out to other small businesses using two methods: (1) referring jobs out; and (2) hiring subcontractors.
Formal Small Business Arrangement
Method number one, referring work out, can be done by using a formal referral agreement. When you pass along job information to another company (that you were initially contacted to handle), you can earn a percentage of the gross or net of that job. (The terms of the referral arrangement can vary and will depend upon the consensus of you and that other company.)
Use a formal referral agreement, or small business referral contract, to help ensure you get paid for the job — and perhaps paid for any future work that business gets from that company as a direct result of your initial referral.
You can also choose to hire subcontractors as option number two to earning from jobs you farm out to other enterprises. In a subcontracting scenario, your company will ultimately get paid for the work at hand in total, and you will pay the subcontracting companies you bring on to help out with the job.
Conclusion to Foreclosure Cleanup and Small Business Growing Pains
The above are some ideas to help you get over the “growing pains” hurdle. Remember, the most important part of the phrase at hand is GROWING. If you are having pains, it means your company is moving in the direction of bigger and better things, and that’s cause for congratulations and celebration. Keep on moving with your small business.
For more information on how to successfully handle growing pains in your foreclosure cleanup or other small business, see “Question and Answer — Foreclosure Cleaning Business Growing Pains: Too Much Work, No Time to Market, Cash Flow, Losing Clients” at http://www.foreclosure-cleanup-blog.com/?p=7687 for other ideas and solutions.
For related editorials, see the following:
How to Keep Cash Flowing In Your Foreclosure Clean-up Business, http://www.foreclosure-cleanup-blog.com/?p=1600
How to Avoid Getting Burned on Invoices for Jobs Completed, http://www.foreclosure-cleanup-blog.com/?p=2856
How to Effectively Work with Laborers & Subcontractors in Your Foreclosure Cleanup Business, http://www.foreclosure-cleanup-blog.com/?p=6794
How to Grow Your Foreclosure Clean-up and REO Trash Out Business by Making It a One-stop Shop, http://www.foreclosure-cleanup-blog.com/?p=38
How to Collect on Overdue Invoices, http://www.foreclosure-cleanup-blog.com/?p=241
Cassandra Black is a foreclosure cleaning business consultant and small business author. She has written several books, reports and forms about entrepreneurship and the foreclosure cleanup industry. She is also the author of a children’s picture book about entrepreneurship entitled, When I’m Big & Grown. Cassandra’s next book, How to Start & Finance a Small Business While Collecting Unemployment, will be available on Amazon and Barnes & Noble (new release date TBD).