What are some things we should be looking at?
No matter the industry, there comes a time when a business may want to expand and grow. Whether they need to buy equipment, want to purchase a new building, purchase an existing business or grow their existing customer base, a need for bank financing may exist.
As the economy has continued to recover, more options and possibilities have become available to businesses.
There are three things to think about when financing needs exist: return on investment, equity position, and cash flow. In the end, they go hand-in-hand.
Return on investment (ROI) measures the gain or loss generated relative to the amount of money invested. Does having a larger or more productive work area allow your workforce to be more efficient or produce more results that could drive the bottom line? Does updated or additional equipment allow you to complete more jobs and do so more profitably? ROI is one of the most commonly used profitability ratios.
On a company’s balance sheet, the equity position can refer to a business’ assets in relation to their liabilities, or the business’ net worth. For a business owner, building equity in their company is important in both the short and long term. Some business valuation models are derived from a company’s equity position. If the business purchases additional real estate or equipment, what will that do to the value of
Cash flow refers to all the revenue or income coming in to the business versus all the expenses or debt payments going out. Depending on the industry, a business’ cash flow can vary day to day and month to month. How will new investments in real estate or equipment affect the business’ ability to take care of their other day-to-day expenses? Will those short or long term investments end up adding profit to the bottom line, which helps build equity and create a desired ROI?
A lot of any business’ successes are built on the relationships they develop and maintain day to day. Providing great products and services and developing trust equals retaining good customer relationships and the possibility of referrals. At Luana Savings Bank, we are no different. From the beginning, we work hard to understand our customers’ wants and needs, set obtainable expectations so both parties know the game plan and work hard day after day to earn our customers trust.
We welcome you to visit with our commercial loan experts at Luana Savings Bank to see how we can help your business continue to grow, service your customers profitably and efficiently, and obtain the successes you are working hard to achieve.
Luana Savings Bank