How will inflation force you to change your business

How will inflation force you to change your business? Inflation is a funny thing. You can’t pinpoint the exact day it impacted your business. You can only look back and notice the changes it made. As an entrepreneur there are two paths you can choose: 1) let inflation happen and watch your business slowly fade, or 2) get out in front of inflation and watch your business take market share from businesses that follow the first path. Whether you understand inflation or not, every business is faced with the decision to be proactive or reactive. Cash flow is the single largest reason businesses fail and inflation can accelerate cash flow challenges if not managed properly.

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There is #NoFreeMoney for your business (ever)

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It’s going to cost how much!!! You must be crazy!!!

That comment is made by entrepreneurs and business owners after hearing how much it costs to borrow money from either a mid market or private lender. The comment is usually followed by a series of expletives that I won’t type here but needless to say the cost of capital is something that can scare or upset someone who maybe hasn’t thought through the opportunity cost (see past blog post here). There is no such thing as free money when it comes to business but more importantly the money your business is using has a cost to it that you may never have thought about but you might want to.

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What is opportunity cost?

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“…the loss of potential gain from other alternatives when one alternative is chosen.”

Running a business comes with an never ending series of trade offs and there are times when critical decisions need to be made that seem to have greater trade offs than what you may be accustom to. This can be particularly agonizing when a decision involves needing expertise that you may not have access to – like financing. When given an opportunity to profit from a decision that involves needing to find capital, often times entrepreneurs and business owners will either lean in and commit or miss the opportunity as a result of their lack of knowledge. Opportunity cost is a real concept that impacts many businesses but here are some things that might help you if you find yourself in a position where a gain to your business will involve being creative with how you find the capital to take advantage of it.
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Do you know who to #getmoney from for your business?

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Let’s face it. Entrepreneurs and business owners are always looking for money. I find it interesting that many folks running a business who need money don’t take the time to really understand how much money is actually out there and available to them. When words like “money, financing and capital” are used they can cause someone’s eyes to glaze over as these terms are associated with confusing and uninteresting concepts. The truth is that money can be complicated and boring to understand but it doesn’t have to be.

Here is what you need to know about how your business can #getmoney. Continue reading “Do you know who to #getmoney from for your business?”

Don’t be fooled by #fakemath

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I was listening to a podcast by Gary Vaynerchuk this morning as he was giving a keynote speech and he mentioned the term “fake math” to define a concept related to marketing and advertising but it stuck me as being completely appropriate for entrepreneurs and business owners. #fakemath tends to be a real problem for businesses that generate less than $25,000,000 in gross revenue. What I mean by #fakemath is the difference between what a business expects to make or achieve and what they are actually making and achieving. Continue reading “Don’t be fooled by #fakemath”

Equipment leasing – things you always wanted to know

Have you ever wondered about what is involved in leasing (or financing) equipment?  I chatted with Danilo (Dan) Terra of Leasex Financial this morning and we covered lots of ground.  Dan is quite optimistic about the current economy here in Alberta and is excited to see the growth that is happening with his clients.  Having been an ex-banker Dan has been able to become a specialist in equipment leasing and financing and he shares his opinions, thoughts and advice on our Google Hangout.

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Is your balance sheet a junk drawer or garage?

I chatted this morning with Calgary based consultant and CA, Brad Celmainis about small business finance.  Brad is an accountant with a great personality who thrives on helping small businesses.  In addition to being somewhat of an Instagram celebrity (click here for his account) Brad specializes as a contract CFO and/or controller.  We chatted about some basic finance topics that every small business owner should consider including why a balance sheet is so important to review on a regular basis and clean-up as necessary.  Brad drew a comparison based on his experience that many business owners treat a balance sheet like a junk drawer or a garage – lots of items in there but no one really knows what they are.

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Do you really need an investor for your business?

I had a great meeting with a new contact yesterday who was seeking some financing for her business.  When asked what the funds were for she advised that the money would be used for marketing.  Her business has already had a small measure of success and has accumulated a few hundred interested prospects and a handful of customers.  Her reason for wanting to spend money on marketing the business was to try and drive more people to the front door of her business.  I have heard different versions of this story from many entrepreneurs and businesses including Bridge Capital who has had outside investors.

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Who owns a piece of you? (Understanding guarantees)

Disclaimer: I am not a lawyer.  This is one of those topics that causes heart burn for individuals and businesses that may be unfamiliar with how banks and lenders operate.  This topic is almost as bad as discussing bank fees – but not quite.  What is a guarantee?  A guarantee is an agreement that either you or your company is liable for a debt or obligation.  There are 2 basic kinds of guarantees: personal and corporate.  A personal guarantee means you are liable for a debt or obligation and a corporate guarantee means your company is liable for a debt or obligation.  So what’s the big deal? Continue reading “Who owns a piece of you? (Understanding guarantees)”

Pull off the band-aid and stop drinking the kool-aid

This year 3 clients have contacted me in situations where they are out of money and things do not look promising.  It is important to note that they are not new businesses and have been around for awhile, have a customer base and provide a product or service to the market.  So how did they run out of money?  Unforeseen circumstances (like not being paid on large invoices), unbudgeted costs (like a software fix), slow down in sales leading to cash flow gaps are all reasons and each of them are unique in their own right.

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