Why Aren’t More Small Businesses Acting on Growth Plans?

According to the Gallup Small Business Index conducted January 3-9, 2018, 52% of business owners reported revenue growth over the preceding 12 months, an 11-year high.

Business owners are feeling a level of optimism they haven’t in a long time, and after sitting on growth plans for years – or not bothering with them at all – they’re signaling that they’re ready to act.

According to the National Federation of Independent Business, a record number of small business owners believe economic and business conditions are right to put their growth plans into action.  Yet when asked why only 38% of small businesses have acted on a new growth initiative they point to “access to capital”. Why aren’t more small businesses acting on growth plans?

“Access to capital” is the phrase that might be causing the disconnect. When a small business owner looks to enact a plan for growth, they often allow “access to their own capital”, or their current cash position, to stand in their way. Matching expenses to revenues is the secret sauce of any growth initiative. Whatever your idea for growth, the new revenues are unlikely to arrive instantaneously once you write the first checks to cover the growth expenses. It takes time. And that’s the problem.

Significant cash outlay before new revenues arrive create a cash drain on company operations that is somewhere between painful and intolerable. Think of the new equipment required to support the new customer contract. It may take 30-60-120 days or more to ramp up to a production level that begins to justify the up-front investment required to get things going.

The bigger the investment, the bigger the gap. Expanding into a new product or service offering? Opening a new location? Not only do these items require a larger capital investment (and the associated near-term cash crunch), most of the time they take longer to achieve the revenue support level that aligns with your growth vision.

But a little confidence in the finance game can help you overcome the “caution” you may be feeling. By using a lending partner that can allow you to preserve your cash reserves and protect delicate bank lending relationships, you can start acting on those growth plans. Maybe it’s a no-payment for 90 days, 100% financing equipment structure or even financing in those installation or delivery costs to further preserve your cash, a creative lending partner you can trust…can help.

SLS has helped business owners grow with uncomplicated financing for over 30 years. If you have a growth plan that is on the shelf because of the short-term cash impact it might cause…let’s talk.

Business Lending Central

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A blog serving the Equipment Leasing & Equipment Financing Industry while also analyzing related Business Loan / Commercial Lending Products & Practices