Don’t Ask for the Money You Need, Find it

Growth is on every business’s to-do list year after year. No matter how the company did in 2016 or what unforeseen changes might hamper it from reaching the ambitious goals set for 2017, all owners want to see higher profits than the previous year (or any other year they’ve been in business for that matter). What drives this need for more and more growth? Benjamin Franklin hit the nail on the head centuries ago when he said, “Without continual growth and progress, such words as improvement, achievement and success have no meaning.”

Growth equals success. To achieve growth you need a large capital base. To get capital, you need to ask the bank for a loan, right? Not always. With proper financial planning and good business projections, you might find that you already have access to the capital needed for this year’s business growth goals and beyond.

Use Cash Management to Find Money

A business owner once told me how busy she was. The company’s numbers were up across the board, but it wasn’t translating into profit. She wasn’t sure what to do, so she reached out to Links Financial for help getting a loan from the bank. Before talking to potential lenders, though, our firm asked for her projections. We were surprised to discover she did not have any immediately available.

When numbers are up but profit is not, you should always look at your books and find the disconnect. Without a good understanding of cash inflows and outflows, you could be losing cash simply by not collecting receivables or because you pay bills at the same time payroll is due. Basic cash management planning may increase your company’s cash flow by thousands per month.

Related topic: Cash Flow Lending

Projections & Cash Management Planning

Taking the lead in cash management planning and projections yourself will not only enable you to be aware of the capital you already have, it also will make you a proactive business owner. Instead of procrastinating, scrambling, and letting someone else forge a path for your company, you will have the data to make the best decisions for growth.

To get started, run your own projections. Basic projections should include the following:

  • Sales forecast – include how many leads and conversions are needed to meet your growth goal.
  • Expense budget – it may be best for your company to differentiate between fixed expenses (i.e. rent) and variable expenses (i.e. advertising).
  • Cash flow statement – this is where you forecast money coming in and out of your company occurs.
  • Income projections – this is your profit and loss statement; don’t forget to account for variables like insurance and salary increases.
  • Assets and liabilities – this balance sheet should include items that do not fall under profits and losses (i.e. repayment of principal and debt owed).
  • Breakeven analysis – this is especially important to potential investors.

Once you have your projections, use them! Too often this part of financial planning is put in a drawer somewhere never to be referenced again. Keep your projections handy, measure how you are doing throughout the year, and adjust as needed. For help with financial planning and restructuring, contact Links Financial today.

What to read next: Sources of Financing That Your Company Isn’t Utilizing


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