Necessity is the Mother of Invention
Topic: Entrepreneur Evangelist,Managing Your Business | Comments Off on Necessity is the Mother of Invention
Yesterday CNNMoney.com published an article on this week’s government report that states, over the past six months, the “22 banks that got the most help from the Treasury’s bailout programs cut their small business loan balances by a collective $10.5 billion.”
The report goes on to highlight that over the past six months that TARP recipients have been required to report their lending activity, “the banks have cut their collective small business lending by 4%.”
It’s impossible not to recall WorkingPoint CEO Tate Holt’s recent blog articles entitled, “Main Street vs. Wall Street,” in which he asked the question, “Rather than making it easier for banks to access funds, why not make it easier for small business owners to access funds?”
It sounds a lot like the “too big to fail” argument, doesn’t it? At best, it’s extreme and reckless hubris. Small business employs 52% of the American workforce, and is routinely responsible for providing the majority of new jobs generated in this country. And yet 3 of the 22 financial institutions that got TARP money do not provide loans to small businesses at all, while the other 19 continue to cut back.
Entrepreneurs are a profoundly important element to our economic recovery. While the large financial institutions continue to try to mitigate their risk by denying small business loans, there are a few things that small businesses can do to help ride out the credit crunch:
- Use a community bank. (Kelli recently discussed this in her WorkingPoint blog post titled, Managing Your Cash (Pt. 3).) Just like in your small business, a community bank is owned and operated by local people who understand local needs, trends and conditions. Building a relationship with your community banker is the best way to help build in some insurance for yourself, because local banks make decisions locally, instead of across the country where no one knows you, your business or your reputation. If you need an idea of where to start, CNNMoney.com has a list of banks by metro area that have recently made SBA loans.
- Find (or form) a local entrepreneur or small business network. Networks of entrepreneurs can often help share resources, collectively negotiate rates for goods or services, and offer creative problem solving solutions that you’ve never previously considered. Think of it as local, small-scale crowdsourcing of ideas and services.
Other possibilities to consider:
- Do you have a local college through which you can bring on interns to help supplement your staff or work on special projects? College interns can often help with a lot of the areas outside of your core business functions, such as marketing, advertising, website design and development, etc.
- Have you considered the myraid of online crowdsourcing opportunities? Crowdsourcing is a powerful way to parse out discreet tasks, especially those that you need to get done quickly, but for which you do not have the in-house talent to manage yourself.
- Do you need to rent your own office space, or do you have local co-working facilities or sublet spaces that might be more affordable? Obviously not all businesses can share space, but far more can than do. Is yours one of them?
- Do you have a network of other entrepreneurs with whom you can partner to bid on larger opportunities than you would normally be able to support alone? A couple of bigger clients can make the difference during a downtime; and businesses that do not have the contacts or the requisite formal relationships to get a foot in the door can still partner with someone else to have access to some great opportunities.
- Have you gone back to your existing vendors and attempted to renegotiate your current rates? Everything from your cell phone provider, to the interest rates on your credit card are potentially re-negotiable if you continue to be persistent.
- Do you have a local adult or community education program through which you can teach a course? Often times, this is not only a great opportunity to help supplement your income (a little bit, anyway), but it’s a great marketing opportunity, since community education providers see an increase in attendees when the economy is down.
Finally, get creative. Obviously there are some things for which cash is essential, and there is simply no way around that. But there are a lot of things that may come with more options than you’ve previously considered.