While the number of women-owned businesses has surged in recent years, many still struggle to grow — due in part to issues securing capital. Only 2.2% of venture capital funding went to female-founded companies in 2019, and the number of small business loans has shrunk overall since the 2008 recession. No wonder women in business say a lack of cash flow or capital is their number-one challenge.
Luckily, there’s more than one way to grow a small business. Stabilizing cash flow and cutting costs will free up funds to fuel expansion, and there are many non-traditional options to help women-owned businesses make that happen. Here are four ways women entrepreneurs can grow their companies by considering alternative payment and credit options.
1. Outsource operations so you can focus on what you do best
As a small business owner, you probably wear many hats. One minute, you’re making strategic decisions as CEO of your company; another minute, you’re chasing invoices from customers. All that multitasking might keep you on your toes, but it can make it hard to focus on what your business does best: delivering a stellar product or service.
By outsourcing back office operations like accounts receivable and customer service to specialists, you can free up time and attention to focus on higher-level tasks that drive growth. You’ll also save money and increase efficiency in ways that will further maximize your business performance. For example, outsourcing collections to a trusted partner can reduce days sales outstanding (DSO) and gaps in cash flow. Many vendors will also white label their services to provide a seamless and consistent experience for your customers.
When searching for a partner, think about your needs in the long-term, not just the current state. Find a vendor that works with a variety of business sizes from SMB to enterprise, a sign that they’ll be able to scale with you as you grow.
2. Build your bottom line by extending credit
Requiring payment upfront may give you a feeling of security, but it could also be holding back growth. For B2B companies, offering Net 30 payment terms will increase customers’ spending power and their average order size. It may also boost loyalty since customers who enjoy an exclusive line of credit at your business will be more likely to buy from you than from your competitors.
However, verifying that customers are creditworthy takes time and energy that might be better spent growing your business. A vendor offering Credit as a Service (CaaS) will handle this process for you. With CaaS, the vendor onboards new customers instantly, using automated decisioning to accept or reject their credit application — often within less than 30 seconds. The vendor then extends a line of credit to accepted applicants on your behalf, under your brand, at zero risk to you.
3. Use alternative financing to fuel growth
When banks tightened up lending to small businesses after the 2008 crash, alternative lenders began filling the gap. These nimble fintech companies make decisions about loans and lines of credit quickly — sometimes within hours of receiving an application — making them a great option for companies that need positive cash flow fast.
Before obtaining a loan or line of credit from an alternative lender, compare offerings from multiple providers to ensure you’re getting the package that best suits your needs. Interest rates, fees and the term of the loan (how long you have to repay it) are all important factors to consider.
4. Boost loyalty with better customer experience
Tech firms like Apple and Amazon are setting the tone for customer expectations, and B2B companies need to match their level of customization and personalization. Companies that cater to these evolving expectations will keep customers coming back over and over again — and see increased cash flow as a result.
How can you make your customer experience more Amazon-like? First, offer instant onboarding. It takes most companies more than two days to onboard a new customer. By shortening this process, you’ll get your money faster and make your customers happy.
You can also make customers’ preferred forms of payment available at checkout. For example, if you offer exclusive lines of credit, make invoicing an option at online checkout. As an added bonus, by reducing dependency on credit cards and therefore by cutting fees, you will save additional cash that you can pour back into your business.
A lack of cash flow makes growth challenging for many women in business. However, women can build successful companies and improve the financial health of their businesses with alternative payment and credit options. With the right tools and partners, your small business can reach its full potential.
