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Seek alternative funding during down times

During a recession, traditional sources of funding for small businesses may not be available, says Asher Epstein, executive director of Dingman Center, at University of Maryland, College Park’s Smith Business School. In an online video presentation, Epstein urges small business owners to seek alternative methods of financing, such as through vendors, suppliers, and customers.

Traditional sources of capital include investors, angels, friends and family, and venture capitalists, credit-card and home-equity leveraging, and payable extensions. However, he says, in a down market, most of those options are not available. He recommends that small business owners:

1. Assess their business to identify capital needs over next 12-24 months;
2. Reduce expenses to the point of operating on a break-even basis as fast as possible;
3. Preserve cash;
4. Pay off some existing debt;
5. Renegotiate payment terms of payables;
6. Renegotiate your lease, banking fees, and communication-system expenses.
The video can be seen at
Source: Small Business Success Index

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