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Simple and Smart Business Financing Ideas

Simple and smart Business financing ideas

You’re likely here because you’re thinking of the health of your business, correct?  Smart.   Right now it’s all confidential anyway.

Making the next decision has to be right and concise, I get that.   Over the long term this next decision is to add value to your business and may require additional capital, or some other bigger plan that requires a comprehensive review.   Either way, cash-flows and financing are two closely related components to you.

Are you effectively financing your assets? How you do that allows you to manage your cash flow and working capital, budget for next year, and determine if you’re as profitable as you can be. In cases where you are not generating profits now look to monetize assets that provide higher working capital ratios, of course when it makes sense too.

For example, recently I met with a potential client that had top line revenue of half a million dollars. She had aggressive plans to grow but there was a noticeable fly concern in the planning…there wasn’t any financing plan in place.   Effectively, she wasn’t working with a cash-flow forecast, just a Sales plan that showed profitable but not any way to ensure payroll was paid monthly.   She is very bright and got caught up in the usual – Sales orders that where very compelling but forgot to smooth in AR.    As it turned out, we subbed in a combination receivable and inventory working capital line, a smaller one – $200k in place to reasonably balance the risks.  Now she can breath at night…how often can we have this moment?

Everything sounds fine now …but is it?  Expansion to meet demand!  When will this end?

Next opportunity…The CSBFP which provides gov’t guaranteed loans for Canadian business financing needs. This small business loan funds leasehold improvements, equipment and even real estate. It is not a ‘ cash flow/working capital/line of credit ‘ loan and only funds the three asset categories mentioned here. Interest rates are very competitive in this small business financing program. Small business loans for startups are difficult in the best of times – let’s not even mention a pandemic!!!  So the ability to fund your company at an interest rate and term that suits your capital needs is a solid benefit to any entrepreneur.

Under the program, the government of Canada allows the financial institution, ie a chartered bank or business-oriented credit union to administer the program under the government auspices. While many business owners tap friends and family etc. funding they eventually find a loan from these support groups are best levered toward a larger borrowing solution.

Successful entrepreneurs are savvy and don’t avoid financing needs altogether – that’s silly to say otherwise.    In some cases though, they leave it unattended but someone who isn’t  vested and that’s a no-no.  Our function is to be that person – act as your ‘vested’ support and planning professional.

Here’s some ways we action the process…a few questions of you to get us started

  • Are you aware of all options to finance working capital
  • Are you likely in need of additional owner capital
  • Should I lease or buy…benefits?
  • Do we have a cash-flow forecast and has that been brushed against other capital needs?
  • Is the owner earning what they are worth?

 

Bottom line.   Talk with your informed business financial support advisor first, after all they’ve been with you thus far.   Only after that if it makes sense, get a second opinion because often it’s just a phone call.

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