Sooner or later all businesses big and small need to borrow money. Cash flow gaps may be planned (i.e., financing growth) or unplanned. Either way, the way to avoid turning cash-flow shortages into cash-flow crisis is to have a financial management system that alerts you of potential problems way ahead AND to have financing options in place before you need them.
Banks love to lend but they are very wary of borrowers that need the money NOW. So now that your business is profitable, generating cash and growing, ask for a line of credit.
But before you call your banker make sure you have your (financial) house in order: Update your business plan. Remember your business plan tells your company’s story and bankers love to hear stories, especially those that sound plausible. Get your latest financial statements (income statement, balance sheets and statement of cash flows). Include the financial analysis of operations for the period and year to date and explain where you expect your Company to be in the next 12 months.
Getting the line of credit in place NOW that you DON’T NEED IT will prove a very smart move down the road when you do. It is worth all the paperwork your banker is going to make you go through. And once you get it remember you must manage your line of credit as carefully as you manage your banker. (More on this subject at a later blog).
Questions?
Please call us or email us for a free consultation at. (972) 332-1905 or email us at david@nosnik.com
At nosnik.com we are dedicated to help small business thrive.