(The Other Reason) Why Companies Fail (And How To Prevent It!)
Funding business turnaround. Whether it's growth financing or rescuing a company from that terrible spot known as ' dire straits’ no business owner/manager wants to ' crash '. So imagine our surprise when we read and talked to the management of a firm that put out a great article entitled ' WHY COMPANIES CRASH!
WHY COMPANIES FAIL?
But wait a minute, when we read the article and discussed it with the writer we found it focused on some great, but not financial issues. Those issues included salary and compensation models that didn’t work, strange organization structures, and poor or non-existent business goals. Great stuff, and we'll leave those areas to consultants and others, but that is not our focus, which is failure due to lack of working capital, no financing, poor financing, or wrong financing. Let's dig in!
WILL CANADIAN BANKS HELP?
As we can imagine financing at a time when it's least available to your firm is.... difficult! While we might assume ( or hope ) that Canadian chartered banks are the best or most likely to save a firm the hardcore reality is that bank loan rates and margins and a non-tolerance for excessive risk quickly rise to disappoint when growth and turnaround finance is needed the most.
In fact when Canadian chartered banks feel that your firm reaches ' CODE 10' on their risk meters they actually move your account to a special loans category and increase your borrowing costs. Not what you had hoped!
FIRMS WITH ASSETS AND GROWTH POTENTIAL CAN BE SAVED
Firms that have assets and growth and survival possibilities of course want to avoid bankruptcy and face the burden of losses owners, lenders and investors in your firm.
Assets are what often saves a firm that is a great place to start. While assets can of course be sold off and liquidated. At that time surely the business owner couldn't have any more bad luck... but wait, and then Revenue Canada shows up also. It couldn’t be worse.
CREATIVE FINANCING STRATEGIES ARE NEEDED
But that’s when creative financing strategies employing the concept of asset-based lending can save the day. By carefully assessing and appraising the ongoing value of assets such as accounts receivable , inventory, unencumbered fixed assets,, real estate ( if applicable ), and tax credits and patents.
REFINANCING STRATEGIES THAT WORK
Careful crafting of such a facility allows a firm to pay off existing banks or lenders, come to suitable terms with those friendly CRA folks, and have ongoing capital for maintaining supplier and customer expectations.
When properly negotiated and documented proper borrowing structures can be put in place without onerous ratios and covenants that often control your ability to address growth financing and working capital.
BUSINESS FINANCING SOLUTIONS
Numerous single and combination of finance strategies exist for funding business turnaround and growth. They include:
A/R Financing Accounts receivable financing solutions such as factoring and confidential receivable funding
Access to Canadian bank credit
Non bank asset based lines of credit
Equipment / fixed asset financing
Short Term Working Capital Loans/ Merchant Advance
CONCLUSION
When you're faced with the prospect failing due to financing seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your critical needs.
7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.
Business financing for Canadian firms, specializing in working capital, cash flow, asset based financing, Equipment Leasing, franchise finance and Cdn. Tax Credit Finance. Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations.
Stan has had a successful career with some of the world’s largest and most successful corporations. He is an experienced
business financing consultant
.Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.
Stan has over 40 years of business and financing experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in-depth, hands-on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
7 Park Avenue Financial/Copyright/2020
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