Some business owners are becoming more optimistic about the future. If you are one of them, it is important to do more than just think about the future, you also need to prepare for it.
Challenge yourself to be ready financially for the rebound. By asking yourself these three questions, you can help your business be positioned to take advantage of opportunities when they are presented.
Q: Now that we appear to have survived; what can we do about working capital as the business rebounds because the line of credit was used to support losses?
A: It may be possible to work with a banker to restructure your debt to obtain access to additional working capital or your banker may have other financial sources such as factoring companies who buy receivables.
Q: Now that my numbers are looking better, should I consider refinancing my debt? Is there a better loan structure?
A: Any time the financial performance of your business changes is the right time to contact your banker. At Ridgestone, we specialize in government-guaranteed lending, which often allows us to find terms and structures that provide lower payments and greater access to working capital. Many owners have learned “a low fixed interest rate” isn’t the most important thing when discussing financing.
Q: What have I learned about business that I didn’t know before?
A: Hopefully, you have learned a great deal about efficiencies, budgeting and profit margins. Maybe the company has implemented lean principals, either formally or by chance. Unfortunately, you have probably also learned about cost-cutting and layoffs and while painful to all, this economic situation may help you become a better business owner. Maybe you’ve learned that there is equipment that may increase efficiencies and now is the time to invest. If so, be sure to talk with your banker about your ideas so you can proactively make financial decisions.