The funding landscape has changed dramatically since 2008; however, having sufficient capital to operate and grow a business is vital to its success and survival. The best course of action to having access to capital is to run a business as an entity that creates wealth (value).
Creating wealth means making decisions that contribute to the soundness of the business. Many businesses are managed under a “tax-avoidance” strategy. This strategy leaves a company drained of cash and without the ability to borrow funds because the potential lender cannot discern the available cash flow from the current “tax-avoidance” structure.
Capital can come from many sources: Internal Funding – 1) cutting costs and/or growing sales 2) liquidating assets 3) managing incoming and outgoing cash; Traditional Sources – 1) Banks 2) Credit Unions 3) other commercial lenders; Equity – 1) Owner’s cash 2) Private Investors 3) Strategic Partners.
Understanding the financial condition of your business helps you match the source of funds to the company’s needs. Visit an SBTDC Center to find out more about creating wealth within your business.
Byron Hicks is the Regional Service Center Director of the SBTDC at Appalachian State University. His center, with offices in Boone and Hickory, serves 14 counties in the foothills and high-country of North Carolina. A graduate of Elon University, Hicks has 27 years of experience in business, including commercial lending with major regional banks, management of a family business, as well as purchasing and managing a multi-million dollar grading and utility contractor in Winston-Salem. More »
Ron’s experience represents 32 years in the software industry with roles as major account executive, including implementation and on-going customer support, moving from an individual contributor to executive management over North and South America. Ron was part of the management team of two silicon-valley start-ups that each existed profitably. This allowed Ron to become a partner for 11 years in Milestone Partners, LLC, a private-equity/investment banking firm. More »