| |
| |
|
Strategic Planning Information |
|
|
|
Financing Business Expansion for Your Small Company
How you finance the expansion of your business is important. Borrowing and understanding the consequences of borrowing for your financing is extremely important. If you are going to borrow the money to finance the expansion of your business, you need to make sure that you are not going to get yourself into a cash crunch situation. This is where you are going to have a lot of money coming in from new business completed and invoiced but not have enough current cash flow. When you borrow you will be financing new equipment, locations, signage, or perhaps a new work truck on a credit line, lease or loan payments. The initial payments are going to be due before you get your increased income from the expansion in. This can be a major critical problem and we do not want this to happen to you. When you finance your business location or expansion, you need to make sure that if you will be borrowing and will have to pay that money back with interest charged on the various loan programs. This is going to cut into your cash flow. You could also charge the equipment on a credit card, which is about the same rate as an equipment business lease. Maybe even a little less believe it or not. The easiest way to get financing for expanding your business is to go down to your bank and get a loan. But you are not going to be able to get a loan if you have been hiding all the cash from your business, not making any deposits. That is something to think about. So many small entrepreneurs start out on the wrong foot hiding or skimming cash, then when they need to expand they have no proof of income or sales and cannot get qualified for a loan. Now you may be in a position with your business where you can just pay outright for an additional units, equipment, locations or outlets, if this is the case hats off to you're my friend you are truly in a good position. This is a great position to be in but remember that if you put the money out in cash, you no longer have use of that money for other business needs. But it is a nice position to be in to be able to pay up front as your business grows. Remember though, some business investment assets are easily financed while for the purchase of others it is often easier to pay cash or just write a check. Pkay then you are all set and have determined that the business needs to expand to take advantage of increased sales opportunity in your market place. So, Where to Get Financing? When financing your business expansion, there are many important factors that can make your task a total nightmare (the loan from hell) or extremely easy and a relative piece of cake. The smartest way to finance your business isn't the easiest. The easy way is to pay for it your self out of savings or use a credit card. Unfortunately if you take money out of savings that was there in case of emergency or for a down payment for your house or something equally important, this may put you in jeopardy later if you need that money. The SBA would be a nice way to go but it takes a long time for them to approve a loan. If you own a home they want you to put it in the loan as collateral in case you don't pay your loan back. By the time they give you the money your investment opportunity is often lost. That big account you got that would nearly pay for all the new equipment has to be started ASAP. If you finance through the SBA 7(A) program, they will not let the loan term extend beyond the term of your franchise, if you are a franchised outlet. You may also be required to pay that loan off before you get any others In summary, when doing business with the SBA you will: Pay more as a down payment; Spend more time in the approval phase; Need more collateral; Face shorter repayment terms; Be very aggravated by the whole process. Approval of Credit for simple business bank loan takes time. If you are trying to get credit from your bank or from an SBA loan or something like that, it takes time. Be prepared to wait anywhere from several days to several weeks for approval. You need to factor this in if you are thinking you want to have a new location or more equipment for your current operations. If you need to expand look at your bottom line, can you afford it? Will your cash flow be able to handle the new debt if you are delayed for any reason from local building regulations, an inopportune lawsuit, competitive changes in the market, downward sector rotation in your industry. Think long and hard about these issues and if you decide to go for it, check all your options, interest rates, pay back periods and do what is best in the short term and the long run. "Lance Winslow" - If you have innovative thoughts and unique perspectives, come think with Lance; www.WorldThinkTank.net/wttbbs
MORE RESOURCES:
Google News |
|
|
|
RELATED ARTICLES
GOT MEME? How to Attract Your Clients and Customers Attention No "meme" isn't a typo and Got Milk, the more commonly know phrase, is actually a marketing meme. If you've opened up a magazine or watched TV in the last ten years you've seen the fun and memorable Got Milk ad campaign using celebrities with a milk mustache. When Do I Need To Hire A Business Plan Consultant Every new business owner knows that a business plan is critical - it is drilled into them by potential investors and every banking officer they meet. So why is something that is so important to the launch of a new venture so difficult to write? Good question! In this article I will try to address when you should go out and hire a business plan writer versus taking on the task yourself. Business Planning and the "Bozo" Factor "Bozo" - A clown with a forlorn look, always finding negative implications in every activity or event. A person who tries to find a way to prevent you from moving ahead, giving excuses such as "we've always done it this way, or this is not our culture" when presented a new opportunity or challenge. In Business Planning, Competition is Good When developing the competition section of your business plan, companies must define competition correctly, select the appropriate competitors to analyze, and explain its competitive advantages.To start, companies must align their definition of competition with investors. The Tables Have Turned - Its Officially a Sellers Market Private equity firms have raised so much capital over the last 12 months that they are vigorously competing with one another for opportunities to put their money to work. Business owners, who previously would have had to go hat-in-hand to investors, instead find themselves inundated with unsolicited offers for their companies. Business Process Methodologies I've either been involved with or held a process-related role since 1994. It started in the government with TQM (Total Quality Management). A Unique Joint Venture Twist: Make Huge Profits Even If You Have No Money, No Products, and No List Would you like to jumpstart your online or offline business without spending a ton of money?Without a doubt, joint venture marketing is the most powerful secret to making money online or offline.In its simplest form, you partner with someone else: You either sell their product to your customer base or they sell your product to theirs. Mobile Franchise Business Expansion Strategy If you own a mobile franchise business and wish to expand you will need to have a strategy that involves your franchisor. Additionally if you are a franchisor it is important to have some sort of policy in place in advance so that there are no hurt feelings as franchisees expand. Business Plan Descriptions of Computer System Entrepreneurs often give little if any consideration to their computer system needs in their original business plans. It is a necessity to have mention of your computer system as bankers and/or investors will want to know how you will keep track of your future endeavor. Dayton, OH; Why your Company needs to expand there In Ohio: besides the 3-Cs you should look at Akron, Dayton, Canton, Toledo, Youngstown and their suburbs. We have been serious studying these areas quite intensely for quite a while, here is what we found; Dayton OH, is looking up after the recent GM Plant received high ratings for productivity being able to beat the Domestic Averages for time to build cars and SUVs, it's SUV Plant was amongst the top performers in the Country for time to build at an average of 20. Thinking Like A Farmer One of the difficulties we face in our industrialized age is the fact we've lost our sense of seasons. Unlike the farmer whose priorities change with the seasons, we have become impervious to the natural rhythm of life. 2 Simple Steps Before Starting Your Business There is so much small business information available today that it's easy to be bogged down by the sheer volume of it all. Where does one start? Well, it's safe to say not all the information you'll receive will be of equal value. 25 Ways To Find Companies To Buy When you start your program to purchase your "ideal" company, you quickly realize that your ultimate success will depend on two primary skill sets: 1) Your ability to FIND viable companies that are for sale, and 2) Your ability to effectively qualify the potential acquisition investment once found.This article is about only step one, how to creatively find viable companies and one's that are able to be purchased. Mining Market Data With a heightened awareness of opportunity, ideas can often be generated by market research. The National Women's Business Center (NWBC) defines market research as "a systematic, objective collection and analysis of data about your target market, competition, and/or environment with the goal being increased understanding. Have You Identified the Enemy? One of the most powerful driving forces in human nature is competition. The desire to overcome something or some company, the need to win, the cause, can in many cases be more important than the day-to-day work of the company. Content Management: Wise Investment for Business Prosperity The time when a website was just a simple set of HTML pages has gone by. It's true, just five or seven years ago simple websites developed with HTML and JavaScript were usual. The Top 10 Priorities That Guard Your Five-Star Reputation Making money doesn't make your reputation.. Corporate Contingency Planning Part 1A few weeks ago I attended a seminar sponsored by Independent Solutions Insurance Inc (Edmonton) entitled "Seminar On Disaster Preparedness", during this seminar I heard stories from individual company owners who told us of their misfortunes and how they coped with their crisis. In both cases these crisis were caused by accident, however, a potential catastrophe nonetheless. Innovate Today for Great Leaps Forward Tomorrow How often does your company make a quantum leap forward? My guess is that, on a scale from "frequently (10) - to - never (1)" the answer is much closer to "never" because few companies have a process to innovate or think creatively. Very few attempt to formally think through their business model, their relationships with staff, clients, and vendors, and their product / service offerings. Why Create an Annual Plan? Can you imagine going on a road trip without knowing your destination? Or, building your house without plans? The same can be said about running your business without a plan.They say that "If you don't know where you are going, any road will do.
|
| home | site map |
| © 2006 |
