Advanced Tips on Raising Capital, Part 2

Stock far Payables

Picture this: Your firm owes its creditors a lot of money, and you don’t have the cash in hand to pay your bills as they come due. What can you do to avoid defaulting on these transactions while digging your company out of the hole in which it finds itself? If you have a corporation with stock, why not turn your creditors into part-owners of your company by swapping some of your stock for the debt that you owe?

If your company has a pool of unissued stock available for distribution, offering stock in exchange for debt relief won’t impact your cash reserves at all ‘” a good thing when you’re strapped for cash. And if your company’s stock is attractive to your customers, such a swap can turn out to be beneficial for you and can remove the burden of debt from your shoulders.

Programs

The government is your friend, and the government wants your business to succeed. The more companies that succeed, the fewer people who are out of work. And the fewer people out of work, the more people who pay taxes ‘” something the government holds near and dear to its heart.

If you have a small business, start your search for capital with the Small Business Administration, and then check with your state and local governments to see what kinds of financial assistance programs they offer. If you have a large business, your state and local governments will be particularly interested in making sure that your business does well and that the furthest thought from your mind is moving your company to a different city or state. Cash grants, tax incentives and credits, and much more are available for the asking, so just ask.

Strategic Alliances

Is something about your company attractive enough to compel other companies to want to affiliate with you? Perhaps you have a Web site that gets a lot of traffic, or your products are highly visible in the industry ‘” for example, a certain brand of tool among construction workers. In certain circumstances, strategic alliances offer an opportunity to generate cash or soft-dollar assistance in the form of services and products.

Say, for example, that your Web site plays host to 100,000 unique visitors a day, and the demographics of those visitors are attractive to companies that manufacture sports cars. One company in particular may be willing to pay you to appear on your site, or to provide you with financing to develop other mutual projects of interest.

Alternatively, this same company may be willing to include you in its marketing efforts or to keep you in the public eye or get you better distribution for some period of time. All these things can strengthen your business and hold the promise of future cash in the bank for you.