DECEMBER NEWSLETTER 2023
Scenario planning is a valuable tool for a company’s leadership to prepare for a range of expected or unexpected circumstances that could affect your business. This kind of planning involves considering hypothetical scenarios that could impact your company’s revenue or operations. The main benefit of this type of planning is that you can identify potential opportunities or vulnerabilities in advance and develop contingency plans to deal with them.
By identifying and planning for the future, you can anticipate the impact on your company, allowing you to make informed decisions and allocate resources more effectively now. You’re also likely to discover new opportunities and alternative approaches to future scenarios, ensuring your business responds more nimbly to unforeseen events.
The Value of Scenario Planning
Well-formulated contingency plans allow more time to thoughtfully prepare how your company will react to unforeseen events.
It's a good idea to involve all your stakeholders, such as investors, partners, and employees, in the planning process to ensure effective communication and boost confidence. By doing this, you’re demonstrating that as a leader you’re thinking creatively and flexibly about how to deal with problems ahead. Your leadership can prepare the business to navigate future uncertainties.
Scenario planning can help align an organization's strategy with its vision and mission, ensuring that chosen paths are consistent with the organization's long-term goals.
Businesses that proactively engage in scenario planning may gain a competitive advantage. You can adjust company strategies and resource allocation as planned if market conditions or customer spending changes so you’re less likely to be caught off guard. In addition, scenario planning can help businesses anticipate and comply with potential changes in regulations to stay competitive.
Scenario planning is as essential for all businesses, regardless of size. Scenario planning helps your company to be prepared, innovative, agile, and navigate a changing economy effectively, staying ahead of your competition.
If you’re a business owner worried about how the economy may impact your business in the future, then register for The Funding Strategies Conference webinar on December 7th on “Funding Trends: What to Expect in 2024.” This is part of our bi-monthly series of online discussions with leading financial experts that help business owners learn smart ways to finance their companies.
Sources:
Indeed Singapore: Scenario Planning: https://bit.ly/3Ql09gP
LinkedIn: What is the Purpose of Scenario Planning in Strategic Planning?: https://bit.ly/3QcXKVi
Netsuite: Scenario Planning: Strategy, Steps and Practical Examples: https://bit.ly/49fwDS9
There’s More to Funding than Shopping Rates
If you’re just shopping for the best interest rates on a business loan, you may be missing the larger picture. While different lenders may offer different rates, there’s often a big difference in how traditional and alternative lenders approach financing. Getting the lowest rate upfront may not be the best choice for financing your business. There are plenty of other factors to consider.
Banks and traditional lenders often have pre-set terms and loan amounts, minimum credit score requirements, and a preference for working with larger, established businesses. They focus more on risk than potential. Many smaller businesses may fail to qualify for bank loans if they’re new, don’t have the right credit score, or have a poor credit history.
Second, you may have been denied if your business doesn’t have enough collateral or capital to secure or repay the debt. Low capacity to repay due to too many outstanding loans.
Lastly, any personal issues which surface and could cause concern for the lender—such as criminal activity or anything unsuitable in your public record would be a big red flag and negatively impact the lending decision.
You can always reapply for an SBA loan—but first, try to strengthen your application by updating your credit information through commercial credit bureaus, streamlining your payments, practicing smart spending, and keeping a credit utilization ratio of 30% or less is favorable.
You may want to consider the advantages of funding from an alternative lender who can provide lines of credit, merchant cash advances, equipment financing, and invoice factoring, and more.
Alternative lenders generally offer smaller loans, faster approval times, a customized mix of debt and equity financing, ease of access (usually online) and a range of interest rates. They can be more flexible in lending as they use financial technology and digital data to calculate their loan risk, not just credit scores. Very often an alternative lender is more interested your business plan and associated factors than your company’s credit score.
Instead of just looking at interest rates, it’s a good idea to build a long-term relationship with a lender as they can be an important partner for your company’s future goals. Loans can be negotiated as interest rates rise and fall, but the right lender can help provide recommendations to help your business beyond the loan itself. You’ll find that your company’s success can be just as important to them as it is to you. The benefits of creating an ongoing relationship with a lender can include:
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Finding the right financing mix that’s best for your company at each stage of growth.
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Receiving higher credit limits, better loan terms and rates, and access to a wider range of funding options over time.
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Being able to negotiate late or deferred payments if needed, often without penalties.
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Getting valuable financial advice and guidance for your business and industry.
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Improving your business credit score and reputation with successful rounds of financing.
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Entry into new markets they may be more familiar with which can help drive growth.
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Facilitate partnerships to further mutual business interests.
Join our next roundtable discussion titled FUNDING TRENDS: What to Expect in 2024. We’ll explore expected SBA changes and discuss why the new rules have been delayed. Interest rate hikes, the impact of interest rates on M&A, a Covid 19 resurgence, and strategies to deal with economic uncertainty in 2024 are just a sampling of what you expect when you join us at this end of year roundtable.
The Funding Strategies Conference is the place to gain insight about business finances from those in the know. Whether you work for a small business, medium-size venture, or a large company, the information discussed at the Funding Strategies Conference is designed to be useful and relevant as you plan your company’s path to financial success.
At Funding Trends: What to Expect in 2024, on Thursday, December 7, 2023, at 2 PM ET, we will bring solutions to the table which are practical, can help protect your business, and most importantly, they work.
Attendance is $29.99, if you sign up to receive our complimentary Funding Strategies newsletter, you will be provided a promo code for FREE access!
Sources:
Flexiloans: The Benefits of Building A Relationships With Your Business Lender: https://bit.ly/49gl6SG
Nerd Wallet: Alternative Lending: https://bit.ly/3sdLoV1
On Deck: Why You Should Develop a Relationship With a Lender: https://bit.ly/3sfRT9O
StearnsBank: Benefits of Building a Long-Term Relationship With Your Commercial Lender: https://bit.ly/47eBrFx
Virginia Cooperative Extension: Establishing a Business Relationship With Your Lender: https://bit.ly/45X4IDu
A Funding Broker Can be a Game-changer
When seeking funding for your company, you may run into any number of challenges. Finding the best-suited financial assistance to help manage cash flow and grow your business ensures you smart lending options and enlisting help from a funding broker can be a game-changer.
Simply stated, a broker can help in three important areas: networking, experience, and time.
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Networking: Brokers are in the business of matchmaking—their job is to link business leadership with the right lender. A business broker has relationships with various lenders and has industry connections to help secure innovative funding. Brokers know who to contact in their network and who might be a good fit for your circumstance. They can also use a solid professional relationship to increase the probability of obtaining funding and favorable rates for your business.
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Experience: The financial world can be confusing, so it’s advantageous to lean on brokers with experience in lending. An experienced funding broker possesses market knowledge that fosters creative thinking and can develop different solutions for acquiring funds and/or managing debt. There are so many options in lending and a broker may posit a new outlook based on your specific circumstance. Their knowledge and creativity can change the way in which you procure funding, as well as positively affect the rates you qualify for.
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Time: Everyone knows that time is money. If you are spending too much time and effort educating yourself about different and confusing lending platforms, researching a whole slew of lenders, and creating separate applications, you’re not running your business as efficiently as you could. Take back your time by retaining a broker. They will create an individual company financial proposal and use it to submit to the whole of the market or reach out to their most appropriate contacts. This streamlined effort also speeds up the timeline for the funding process, putting money in your hands more quickly.
Brokers are paid by way of a broker fee, usually one to five percent of the total loan amount and paid at closing. Ideally, the lender will pay the broker, but sometimes these fees are the responsibility of the borrower. In that case, the cost can often be rolled into the loan amount so the borrower doesn’t have to come up with the cash up front. Always ask about fees upfront, but don’t let the fee necessarily deter you. Very often access to a broker’s experience can save you money in the long run.
Relying on a broker is an excellent choice for securing the most appropriate and competitive funding solutions for your business.
For more financial lending tips, check out The Funding University’s monthly blog! Funding is complicated and The Funding University blog is an objective, financial resource you can use to learn how to obtain the right kind of funding, the way you need it, and from the right sources.
Read it here: www.TheFundingUniversity.com/blog
Please Join Us!
2024: The Year of M&A
Thursday, March 7, 2024
2-3 PM ET
In this edition of The Funding Strategies Conference, we'll explore the impact of monetary policy on business lending heading into 2024. Ranging from changes in SBA policy to interest rate changes, our industry experts share their views about what you need to know to prepare your business in times of economic uncertainty.
2024 is shaping up to be a year unlike any other experienced in modern times.
Click to watch our most recent webinar:
2024: The Year of M&A
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The Funding Strategies Conference is a collaboration between ThermoCredit LLC and The Funding University. Together, we designed an educational forum for corporate leaders with fiduciary responsibilities, specifically to help them stay informed of new trends, strategies, and finance options.
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