How to Develop Your Business Financing Strategy

You don’t have to be a top-notch CFO or an accountant to come up with a strategy to finance your business. Just know that it will take more than you showing up at your lender’s doorstep with a bunch of financials in hand.

By looking back at your greater business plan, understanding what a lender typically looks for in a client, and knowing how to present your key financials when the time comes, you can successfully increase your chances at obtaining the financing you need to grow your business.

Follow these three steps and you’ll be well on your way towards a strong business financing strategy.

ONE: Be very clear about your objectives.

No, the objective isn’t just to obtain financing. What are the overarching goals of your business? How does obtaining financing help you achieve those goals?

Make sure that you have a good solid idea of the “big picture” strategy of your business. A great way to do this is to look back at your business plan and identify the main objectives of your operation.

If you can create a case on why you need financing and how it aligns with your greater business strategy, you are instantly ahead of many business owners and entrepreneurs who are often not very clear on the subject.

TWO: Educate yourself on what a lender looks for.

When a lender has to take time to make sense of confusing financials, the chances of obtaining financing for that potential borrower drops significantly.

Remember, questions cause fatigue.

Take a moment out of your busy schedule to understand what underwriters and lenders look for when given a business’s financials.

When the lender has fewer questions while looking over your financials, the better the chances of them truly understanding why they should extend a loan to you.

THREE: Presentation matters.

When the time comes to present your case for financing, take all of the knowledge and tactics from steps one and two and turn it into a presentation that is clear and concise.

Other than clarity, be honest about your business’s performance over the years.

While this may sound counter intuitive, fully disclosing your business’s performance and explaining the data that they see can help build an accurate case for your business.

Stay ahead of the game.

A terrible situation that afflicts many business owners is when they finally realize that their business needs financing, but are unprepared to approach the problem.

Invest time into fully understanding your business’s financial status. This means creating some kind of system for tracking key data points, or seeking outside help from a business finance specialist. When the time comes to seek financing, you’ll be fully prepared to find the right lender to help grow your business.

It’s interesting that people are willing to take the time to prepare for harsh elements by weatherproofing their homes, or paying for car insurance in case of an untimely and unfortunate accident.

Is it all that different to spend time and resources into preparing your business for growth?

Matt Burk is the Founder, President and CEO of Fairway America, LLC. He is also the co-host of FinanceCoach(sm) Radio. Matt is a small business finance expert that helps small business owners navigate the dysfunctional process of business financing by providing ongoing guidance and expertise.

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Need Equipment Loan and Lease Financing? Re-Program Your Leasing Finance Strategy Today!

Sometimes you just need to re-program things to make them work better – that’s what we’re also suggesting when you review your lease finance and equipment loan financing strategies for your company.

Let’s examine how you can maximize your leasing strategy to attain maximum benefits and minimum hassle! That’s clearly a win win strategy.

Focus clearly on eliminating what we can only call the ‘hassles’ of dealing with other types of financing, It’s all about ‘ time’ and your ‘ business bandwidth ‘ today when you are visiting a new asset acquisition. Without a doubt we can state that leasing equipment is by far the quickest method of obtaining an approval, satisfying both your vendors need as well as your own time constraints.

With only a very basic financial calculator you can quickly review all your lease finance options – the favorite question of almost all clients is: ‘What will my monthly payment be?’ It’s about time for you to answer that question yourself, and make sure that your cash flow and working capital remain intact on the equipment loan financing you are contemplating. How? Just remember that the only elements to any lease are: term, rate, amount financed, payment, and end of term option. If you know any 4 of those you can always solve for the final item, which in our case is payment. You should assume an interest rate that is consistent with your firms overall credit quality.

Business owners and financial managers should view their lease finance acquisitions in the context of your overall financial strategy. You might need to ‘re-program’ your thinking on buying and paying for assets outright. Doesn’t it make more sense to keep your cash and line of credit reserves intact, and match the useful economic life of the asset you are acquiring to a predicable cash outlay?

A quick way to ‘re-program’ your leasing needs is simply to always use the same business template for each asset you are acquiring. They key aspects of that decision template, if we can call it that are: cash flow budgeting re the monthly lease payment, reviewing the asset in the context of not having to draw on your business operating line of credit, determining how long you will use the equipment for (thereby matching term and payment) and finally, factoring in balance sheet and tax advantages into your asset acquisition decision.

What’s the biggest ‘re-programming’ issue with most firms. It’s simply their mild obsession with rate. Yes a rate has to be competitive, but view the lease financing rate in the context of the current interest rate environment, the challenge of getting traditional bank financing, and the fact that in the current 2011 environment rates are probably going up and not down. The real reality is that you determine your own rates in your new leasing re-programming strategy! That’s because the largest factor in determining rates for equipment financing is the manner in which you properly present your overall credit quality and financial health.

In summary, equipment loan financing, aka ‘leasing’ has been around for over a hundred years in North America. Take a hard look at why you finance your assets, reprogram your strategies around benefits and ‘how to,’ and acquire your assets with the knowledge you have made the best financial decision for your firm. Need help? Given a choice we’ll take an expert over a rookie any day! Speak to a trusted, credible and experienced Canadian business financing advisor who will work on your ‘ re-programming strategy with you!

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