1. I am under-capitalized and the banks aren’t exactly throwing money at me?
2. I don’t have the personnel to pull off what I want to do?
3. Clients are reluctant to sign a long-term contract for fear of the sluggish economy?

 Outside of begging your friends and family to cash in all their investments and go to work for you for free, what can you do to make a go of it in business when you are under-positioned? Starting a business is not for the faint of heart. There are huge risks and no guarantees. Maintaining a business in these trying times can be like starting the business all over again.

 Under-capitalized

Cash is king in business. How do you operate when you are under-capitalized? There are a number of killers of small business, but at the front of murderers’ row is the lack of funds to operate. When you see the need to make changes to your business, where will the cash come from to make this happen? In the trying economic times in which we live, cash flow has become a trickle for many businesses. There simply are not enough extra dollars coming in the front door to sustain something new. On top of that, banks are reluctant to make loans on such ventures.

Out of this dilemma has arisen a solution from business of bygone years: bartering. There are a number of web sites dedicated to networking with other professionals who are willing to barter their goods and services. Craig’s List has a barter feature. So do web sites like U-exchange.com. That works if you can find another business who is agreeable to the terms of the exchange. There are barter banks that make the process easier. Barter banks bring together all kinds of businesses who make a list of the goods and services they have to offer. They issue barter credits to you based on the services you have provided another barter bank member. You can, in turn, use these barter credits to purchase services from other members. Barter banks typically charge a membership fee and take a percentage of the transaction, so it is not a perfect cashless exchange. However, it does represent one method savvy businesses have used to get around the under-capitalized quandary.

Under-staffed

If you need a level of expertise and cannot afford to hire an employee to do the job, or don’t want to pay to train your current staff to reach a new level, consider hiring an outside consultant instead. Hiring a consultant makes a lot of sense in these trying times. A good consultant should be able to offer you expert advice that more than pays for services rendered. Many times one consultant can perform the work of multiple employees. From an ongoing cost standpoint, you pay the consultant only for what you are using and nothing more. You don’t have to fork over any payroll taxes and benefits to a consultant. Right now, there are a lot of highly specialized personnel who have been cast aside by their corporations who could step into your business and help you immediately. These folks frequent networking groups looking for new clients. If you can hook up with the right consultant, you can move ahead without the obligation of hiring new employees until the cash from your expanded venture pays off.

If hiring an expert is a bit much for your needs, take a look at hiring a temporary employee instead. There are a number of staffing agencies that will provide you with a workforce based on your technical needs. They screen candidates, test them on skills, and, typically, take care of their salaries, benefits and tax withholdings. You pay a negotiated fee with the agency and that is all. You can hire them as your own employee if it works out, or let them go at the end of the day without severance obligations. Large corporations have been using staffing agencies for decades. For instance, investment advisor Charles Schwab has been using this practice for years to fill its call centers. It is a way to meet your personnel needs without breaking the bank.

 Under-contracted

"These are the times that try men’s souls,” so wrote Thomas Paine¹ the American revolutionary. We are in the midst of our own revolution. While the ideological economic opposites have been clashing in Washington DC, businesses have been bloodied in the conflict. Your clients may have been able to predict a seasonal slow time in the past. They may have been able to look at historical trends and give you some measure of hope when things will turn around. However, most businesses have not faced anything quite like we are experiencing right now. There is no confidence in the American economy, therefore businesses are declining on long-term deals, which in turn leads to more lack of confidence. Here is the sticking point. How do you grow when long-term contracts are scarce? There are huge risks and no guarantees. From a business perspective, there are two directions you should follow. First, you will have to be creative in maneuvering through each RFP. You need to give options to your clients to be able to opt out of a contract in exchange for a long-term deal. This takes the risk off of them and puts it on you, but you have a better shot at landing the business. Secondly, you have to be prepared to provide customer service that goes beyond what your competition will do. Think beyond the current situation. Anticipate the needs of your customer on down the road. Help them see their need and offer them your solutions.

The under-position is never ideal, but this is precisely where many businesses find themselves today. While not perfect, there is still room to maneuver and grow a business for those who will be creative and work hard at it.

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1. The Crisis by Thomas Paine. 1776-77.

A Barter Economy by Robert Jones. Entrepreneur June 3, 2008  www.entrepreneur.com/management/operations/article194338.html

Barter Business Unlimited  http://www.bbu.com

U-exchange.com  www.u-exchange.com

Photo by Willie B. Thomas