Most every business eventually has to, or should, fire some customers at some point. It’s counter intuitive to most businesses and entrepreneurs that some customers may just be customers that they cannot afford. It may be your oldest or highest volume customer, or a friend of a friend that you do business with, it doesn’t matter sometimes it just can no longer be justified or make sense.
In the world of banking (20+ years ago), many loans were made with a handshake. Loan documentation occasionally even happened after funds were advanced. Banks and their business customers were neighbors, friends, and often had long-term relationships.
Every industry in the United States has a North American Industry Classification System (NAICS) code. The code is used for a variety of purposes that may affect your bottom line as well as your ability to access business loans.
Sales leads and prospects come from a variety of sources. A long time ago, and dating myself with my copyright statement in the image below, I had to present to investment bankers that were providing interim financing and representing our company in a pending IPO. The investment community wanted to know how we were going to market and sell our products, and spend our healthy marketing budget, to attain the fast growth in revenue we were committing to.
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Ideally, personal financial statements are used to show your personal assets, net worth, income and expenses. As a normal part of applying for a business loan your bank will ask you to complete a personal financial statement. You might even keep a personal financial statement in an excel spreadsheet or in some other program which would only require minimal updating.
Do you know your company’s Key Performance Indicators (KPIs)? These are the very few things that you are measuring which you believe will make a huge difference to your business long-term. In other words, a KPI measures progress toward a strategic goal. If you have 100 KPIs, then you’re not going to be able to use any of them to drive organizational behavior because your company doesn’t have 100 strategic goals. Ten KPIs can be effective, five KPIs are better, and one KPI is ideal.
Many businesses have a traditional working capital business line of credit with their bank but haven’t sat down with their lender to really understand how the credit line should be used.
Generally, lines of credit are short-term loans (one year or less) that should be used to finance current assets on your balance sheet. A good rule of thumb is that short-term debt should always be used to support short-term assets. Long-term debt should be used for purchasing assets that have a life of one or more years.
Even the best managed company will occasionally need to use the services of a commercial collection agency. Picking one that fits your company’s personality while still being effective in collection efforts can require some research and homework.