Financial Advisory

Most West Michigan small businesses do not have the advantage of a treasurer working on its behalf to find the best funding alternatives. This role usually falls to the owners who probably are guarantors of any loans and have direct contact with the bank. For tax reasons and others, business owners have used structures that flow profits to their personal accounts and as a result cash is often minimized in many businesses. We think a proper alternative is to take a longer term view of the business and find ways to build cash and isolate the owner from unforeseen future liabilities. Certainly in world as uncertain as the one in which we currently live, risk management is a consideration for all.

Today many banks are still slow to return to direct lending and West Michigan businesses can be grateful for SBA programs which have minimized bank risk and encouragement to lend. We think these programs will continue to evolve as will some State of Michigan MEDC programs; such as, the existing Cash Collateral program.

The fact we are in a period of secularly low interest rates in our opinion opens the door to increasingly available private capital seeking reasonable returns. This is a return to finance of years ago when local individuals, confident of their neighbor’s veracity might reasonably invest in those local businesses. This situation has a variety of issues associated with it that we will not cover here, but it provides a basis for the adoption of much of the quality of management and profit disciplines that the Collaboration Center encourages and advises.

A major factor in financing, particularly today, is that most borrowers will change banks for a variety of reasons. Companies need to have a professional relationship with its banker with a plan that is transferable and a back up relationship. Another common theme is that it is likely to seek multiple transactions with a lender and each transaction should be made with the future in mind. So a capital and financing plan should be established to make sure there is future capacity when needed. The pressures of the last few years on most companies and, quite independently, upon their banks have made clear the value to having such a plan.

If you are interested in this topic please contact us to receive our white papers entitled:

  • What is the best way to manage your business in period of low interest rates?
  • What is the most important capital in your business?

Financial Advisory for developing exit options

Our economic world is certainly uncertain and has come through a difficult time. We are in an almost unprecedented period of transfer of ownership of businesses and this is true particularly in the small business climate of West Michigan.

It is a process that is easy to postpone, but whenever the decisions to exit are made, the decisions are made much better and sounder with the use of an experienced advisor. The issues to be considered include the seller’s alternatives, the impact on the business and the key players to be affected and who can affect the future of the business. This is a process that should be given ample lead time in order to take into consideration many critical factors, not the least of which is what can be done to realize greater proceeds to the seller.

The process requires experience to be done right and with value to the client.

If you are interested in this topic, please contact us to receive our white papers entitled:

  • Selling or buying a business is tricky business.
  • You can create more value in your business.

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