The Entrepreneur’s Dilemma (II) : How do I navigate through a funding shortfall in China while I increase my capital?

In my last post we discussed what I called the “Entrepreneur’s Dilemma”: determining the optimal capital for the business in China and the debt limit implications (you can read the article here).

German Torrado, from Orienta7, explained to us some of the tools he could be using to navigate through a potential funding shortfall while his company increases capital to the right level for a new business situation.

These are his suggestions (which may or may not work for you depending on your business structure and your relationship with your stakeholders):

1.- Use your SUPPLIERS as a FINANCE TOOL: negotiating with your suppliers can be a good source of extra cash flow:

  • negotiate extended payment terms
  • get credit- guarantee this credit through HK

2.- Use your CUSTOMERS as a FINANCE TOOL:

  • promote exports of some product or service; the cash will arrive to China as an income so it won’t affect your debt limit…

3.- “OPTIMIZE” Salary Structure: if your business has a big number of expat employees this may make sense…:

  • can you organize part of the payments from HK or your home country?

“These ideas may entail some adjustments and a lot of paperwork, but they may help you during a cash flow shortfall….” Mr Torrado explains

I’m sure there are lots of other ideas out there… what are your tips for entrepreneurs in this same situation?

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