Who’s Got Money – A Different Approach
Now is not the time to take your lender’s word on the safety of your financial relationship. It is time for your company’s finance people to meet with other bankers and get them familiar with your company—just in case your current banker pressures you to refinance elsewhere.
Who’s Got Money?
If businesses can find loans from banks these days, the loan rate and fees are higher. The covenants and advance rates are also tighter, a far cry from the “covenant-light” loans that were made in 2005 and 2006.
Reading List: No Man’s Land: What to Do When Your Company is too Big to be Small and Too Small to be Big by Doug Tatum
Tatum makes the case that every company hits rough patches at between $10 and $50 million of revenues.
Value of a Good Business Plan
If there is a pretty good chance that you will need to raise money or attract partners in the future, start preparing now by keeping a file of stories that express who you are as a company, data that gives perspective on your market, and documents that will help paint a picture of the great opportunities that await your company—and, by extension, your potential partners.
Keep your Bank at Bay
Having trouble with a bank or financial partner can cause any CFO or CEO to lose sleep. A line of credit or a loan can be the very lifeblood of liquidity to a business.
Prepare for Down Financial Cycle
We have seen the tightening of the financial markets. M&A markets have slowed. Private equity deals are getting more conservative. Banks are tightening credit standards. And some banks have started calling loans that they were happy to have six or twelve months ago. Many financial players have overplayed their hands, and the pain of correction will be felt by many of their clients.
Reading List: Private Markets: Valuation, Capitalization and Transfer of Private Business Interests by Robert T. Slee
Slee says that business schools teach finance that is based on corporate finance theories, such as capital asset or option pricing models, which are relevant to only the largest public companies in the U.S. These theories are irrelevant to most of the remaining companies, which make up most of the U.S. economy.
The Link Between Strategy, Finance and Financing
It probably won’t surprise you that we at Trek believe in thinking about strategy before money and finance. But, not to worry, there really is a good economic reason for this!
Strategic planning is the ultimate efficiency play. It helps you spend less and make more. Why is this? Three main reasons—focus, resources, and results. If [...]
