Where is Your Business Today? How Would You Use More Capital? | SunTrust Resource Center

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Where is Your Business Today? How Would You Use More Capital?

Where is Your Business Today? How Would You Use More Capital?
 

Many business owners report having little time to step back from the day-to-day activities of business to think clearly about the next steps that might have the greatest impact on their success. For many owners, the time to consider “what if” seems like an uncertain exercise.  Yet, the opportunity cost of not taking the time to plan for the future and project what you would do with access to capital can leave valuable opportunities on the table with significant impact on profitability or your share in the marketplace.

A productive way to begin is by placing your primary business goals into one of three categories: improve, grow or rebuild. While many business owners face issues in more than one category, it is useful to spend the time identifying your primary focus. By understanding your current business dynamics, you can better assess where you are heading. Similar to a golf shot, if you do not pay attention to where you aim, you may be surprised when you miss the green. 

With your overall business strategy in mind, you can prioritize the ways to put capital to work for your business and then work your way towards a back-of-the-envelope capital plan. Only by calculating the impact of potential investments can you begin to better understand the amount and type of capital you need and be able to determine whether more attractive sources – like SBA loans – can work for your business.  Use the table below to think through your current and future scenarios. 

This exercise is a great tool to facilitate a conversation with your key advisors and to assess your current initiatives and options. Who you include will vary depending on your business goals and stage, but trusted advisors might include your CPA, attorney and transactional advisors like business brokers and commercial real estate agents.  A key player to seek out is your SunTrust banker who can help you work through the impact of capital on your business goals and plans.

  Improve  Grow  Rebuild 

Goals

Build on and improve your current business operations

Acquire new geographic markets, employees, customer segments, products, partners, competitors

Restructure ownership and ignite sales efforts while rethinking cost structure

Inputs to consider

  • What are the key drivers to income?
  • What would drive greater output?
  • What would reduce costs and increase profits?
  • Are there hidden costs in inventory turns, financing, collections times?

  • Whatwould drive greater revenue? New products? New markets?
  • How can I grow the market?
  • What are the lowest cost ways to acquire greater share of market?

  • Are there partners who want to exit?
  • Do you need greater personal access to earnings?
  • Do you need to transition expenses to equity-assets?

Potential Uses of Capital

  • Equipment to improve productivity
  • Information technology to improve forecasting and inventory management
  • Finance large customer orders
  • Real estate or equipment purchase to reduce monthly expenses

  • Business Acquisition
  • Expanding domestic distribution or exporting to new markets
  • Hiring new employees
  • Real estate acquisition for new locations
  • Developing new products

  • Partner buyout
  • Real estate or equipment buy lease-back
  • Retirement Financing
  • Division of business assets

Potential Sources of Capital

  • SBA 7(a) - equipment, working Capital
  • Equipment Leasing
  • SBA 504 (real estate)
  • Vendor Credit
  • Receivables factoring

  • SBA 504 (real estate)
  • SBA 7(a) - working capital, acquisition
  • SBA Express - for export markets
  • Traditional secured financing
  • Receivables factoring
  • Secured Loc
  • Vendor Credit

  • SBA 7(a) - goodwill
  • SBA 504 - real estate purchase
  • SBA Specialty - for certain owners
  • Equity investors(VC/Angel)
  • Traditional secured financing (real estate or equipment buy lease-back)

This content does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

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