13 Apr 2017
When you think of scaling or growing your business, what comes to mind? For many business owners, growth means adding new employees, moving into a new market, or adding new products, all with the goal of increasing profits and revenue. But your company doesn’t have to grow on its own. Another option is to join forces with, or merge with, another business. Whether the company you merge with is a bigger business or a similar-sized competitor, the move can have benefits for both of you.
1. Increased Cash Flow
One of the biggest benefits of a merger, especially for the smaller business, is increased access to financing and cash. If your company is relatively new and struggling to get debt financing or investor interest, but then joins with a business that has a long history or an established reputation, you might find that it becomes easier to attract investors or to get banks to lend to you. Alternatively, the merger might make it so that you no longer need to work with individual investors or seek out loans. The company you partner with might have deep enough pockets that it’s able to provide enough cash to keep your business afloat.
2. Improved Efficiencies
Another way that a merge can help your business is by making it more efficient. Instead of having to pay for two of everything, which was the case when you and the business you are considering merging with were separate companies, you can have just one of everything. That can lower your overhead, the amount you need to pay for employees, and the time it takes to complete certain processes.
3. Broader Customer Base
When you merge with a company, you get to expand your customer base without having to do extensive demographic or marketing research. If two similar companies are coming together, they can combine their customer lists to create one master list. If you’re joining with a larger company that covers a variety of niches and demographics, you can gain access to some or all of that business’ customers. For example, if you are a smaller retail outlet that sells clothing for women and you merge with a larger department store, your store suddenly has access to the women who might have frequented the department store, but not your boutique.
You can also expand your customer base by merging with a company that is based on the other side of the country or in a different market from your own. For example, if a small chain of stores on the West Coast merges with a chain based on the East Coast, the stores are now able to reach customers that they wouldn’t have connected with previously.
4. Add New Products to the Mix
Researching and developing new products is one way for a company to grow. But research and develop costs time and money. Merging with a similar or larger company allows your business to diversify or increase its product offerings without having to spend an extensive amount of time or money on developing those products. In this case, it helps to merge with a business to seems to be a natural fit or extension of your own. For example, the smaller boutique that merged with the larger department store will be able to offer its customers related products, such as jewelry and accessories, in addition to the clothing it was selling previously.
Even if two similar-sized, related companies join forces, offering new products becomes easier. You benefit from having an increased budget for product development, for example.
5. Benefit from Experience at the Other Company
One big benefit of merging with a more established, larger business than your own is that you are able to take advantage of the years of experience and expertise people working for that company have. In some cases, it’s as if merging with a bigger company means gaining a mentor or two in the industry. Plus, once you merge, you are all working towards the same goal: the common good and growth of your two companies, instead of competing against each other.
Although a merger can benefit your business in several ways, it’s possible for the process to go off the rails or to face challenges. A virtual chief financial officer can help you through the negotiation process, creating a merger that benefits both parties. To learn more about how to successfully navigate the merger process, contact New Direction Capital today.
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06 Apr 2017
Businesses often don’t think to cut costs or trim expenses unless they absolutely need to. When your business is in the black and cash is flowing, it’s fairly easy not to think about the need to save money or to find ways to get more for your money. Quick and easy ways to cut costs is something your company should always be on the lookout for. Cutting costs can help a thriving business thrive even more and can be the difference between life and death for a struggling one.
Put a Stricter Spending Policy Into Place
A common piece of advice given to individuals who want to save money is to track spending. The same advice works for your business, especially if it has multiple departments that each have their own budget. Pay close attention to what employees are spending on, such as miscellaneous office supplies or company funded lunches or snacks, then consider ways to rein in that spending.
You can trim spending by setting up an approval system for each purchase, instead of allowing departments to buy whatever, whenever as long as it comes under budget. Having to get approval before buying new office equipment will encourage departments to really question if they need the purchase.
Find Ways to Consolidate
Spending money on celebrations and special lunches for each department separately can add up financially and lead to a considerable amount of waste. Have you ever been to a business meeting or departmental celebration that had bagels, pizza or sandwiches and that didn’t have massive amounts of food left over? At many companies, that food is just tossed out after the party or meeting is over.
But if you decide to hold meetings for several departments on the same day or to combine several department trainings or celebrations into one, you can cut down on the amount of food you need to order and on the amount of food that ends up in the trash.
Swap Paid Services for Free Ones
Many services that businesses once had to pay for are now available for free or for a considerably reduced rate. Trading a paid service for a free one can be a particularly effective way to save money in a pinch. You can always switch back to the paid service once your business has righted itself financially, if you find that that free option doesn’t cover your needs.
A few example of services that you can get for free or pretty close to it include phone service (such as Skype or Uber Conference for conference calls), radio or music streaming (such as Pandora or Spotify), and an office suite (such as Google Docs).
Get Rid of Certain “Extras”
Offering employees perks or extras can make your company a more appealing place to work. But those same extras can also drain your financial coffers during a lean period. Re-evaluate the perks you’re offering and consider eliminating them or offering lower cost alternatives. For example, offering a company car to every manager can be a nice bonus, but it’s incredibly expensive. Instead of paying for cars, offer to reimburse employees for mileage or gas, when they need to drive for company-related functions.
Getting rid of bottled water can be another way to save your company some money. Instead of having pricey bottled water delivered on a regular basis, you can have a water filtration system installed, so that employees can easily get access to hot or cold water.
Ask Employees to Work Less
Letting go of certain employees can help your business cut costs. But if you’re already working with a lean team, you might not be able to let anyone go. Another way to save money is to have your team work fewer hours. For example, don’t allow non-exempt hourly employees to work more than 40 hours a week, so that you aren’t paying for overtime. You can also ask each employee to cut their hours by about 10 percent each week, having them work 35 or 36 hours instead of 40.
If you need more assistance finding ways to cut your company’s costs and spending, ASAP, the team at New Direction Capital is here to help. Contact us today for more details.
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23 Mar 2017
It’s a lot easier and cost effective for businesses to work on retaining their customers rather than constantly seeking out new ones. But there might come a time when a major customer of yours decides that it wants to move on or when a big client has a better offer from one of your competitors and decides to pursue it. Depending on how much revenue that particular customer brought it, the decision to part ways could really rock your business. Feeling upset or frustrated when a client leaves your company is common, but it’s important to have a plan in place to move on and bounce back.
Check in with the Client
Assuming that the parting is at least somewhat amicable, it can be helpful for your company to have a post-separation check in with the client. Schedule a call with the customer to ask why it decided to move on or to work with a competitor. Although your old client is not obligated to explain its reasons for moving on, many are likely to let you know what they were unhappy about or what damaged the relationship.
Any information you get from the customer can help you in the future. For example, the client could have decided that the relationship with your company wasn’t working because it felt that you weren’t communicating with it or that the products or services you delivered weren’t what it was it expecting. In some cases, the decision to part ways might have been out of the client’s control. For example, the company might be going through a rough patch financially and is no longer able to afford working with you. The customer might be closing up shop itself and no longer needs your company’s services or products.
Connecting with the client after they have decided to move on allows you to keep the door open for future contact. For example, if you find out the customer can’t work with you anymore because of financial difficulties, you might be able to work together in the future when it is back on its feet. Additionally, learning what upset the client can help you learn to avoid making those same mistakes in with current or future clients.
Reach Out to Your Remaining Customers
Although the client you lost might have represented a significant portion of your company’s revenues, ideally they weren’t your only customer. Take some time to check in with your remaining clients to find out if there is something your company could do better, what aspects of your product or service they are happy with, and just to take a general temperature with your clients. Losing one client can be a big enough shock to your business. You don’t want to have several jump ship all at once or one right after the other.
Focus on Pitching New Clients
Being dumped by one client can be a great reminder that companies need to focus on growing business and landing new clients all the time. A large customer might have taken up a considerable amount of your company’s time and resources. Remember that you need to consistently make the time and energy to focus on marketing and reaching out to a new customer base or on trying to expand your current customer base.
Have a Back Up Plan in Place
It can be helpful to have an emergency plan in place just in case your company does suffer a set back after losing a big customer. Even if you throw your all into keeping remaining clients happy and finding new customers, it can still take several months for a business to recover financially from the loss of a major source of income. Your back up plan can involve taking a salary reduction yourself, temporarily laying off certain employees or having a system for cutting expenses and spending until your company has bounced back.
Developing and maintaining strong client relationships is one of the things New Direction Capital values most. To learn more about how you can strengthen existing client-company relationships and build new ones, contact us today.
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Getting debt financing or a loan for your company isn’t as easy as it might seem. Banks and lenders want to have some proof or reassurance that you’ll be able to pay back what you’ve borrowed, before they will lend you the money. Although it is possible for even a qualified and prepared company to get turned down for a loan, there are several steps you can take to increase your business’ chances of getting the financing it needs to grow.
Allow Time for the Process
The process of getting a business loan might take considerably longer that you expect. If you need money or cash within a week or a few days, that might not be enough time for a lender to review your loan application, approve it, and issue you the funds.
Allowing enough time for the loan application and approval process also means developing a clear understanding of whether debt financing is the right option for your comany at the moment. If your business regularly finds itself in need of cash, for instance, it might make more sense to re-evaluate your budget or find ways to improve cash flow, instead of taking out a loan.
Have Your Financial Details in Order
Banks and lenders offer the best interest rates and loan terms to people with the best credit scores. Depending on how long your business has been operating, a lender might look at your own credit score when deciding whether or not to lend to your company. If your score is below 680 or so, it is worth the effort to bring it up before you apply for a loan for your company. Your repayment history plays a big role in determining your credit score. If you have a history of missed or very late payments, making a concerted effort to always pay on time will help improve your personal score and the likelihood of your business being offered a loan.
Along with focusing on your own credit score or the credit score of your company, it is important to have plenty of documentation to offer a bank to show that your company has steady earnings, that it’s repaid any past loans as agreed, and that it has some type of collateral to offer.
Know How You’ll Use the Loan Money
A lender isn’t going to give a business financing “Just in case.” Before you start the loan application process or begin to shop for financing, be sure of the reasons why your company wants the money and provide the bank or lender with a specific plan. For example, your business might want to use financing to purchase more inventory so that you can boost the amount of products you make or sell. Another feasible use of the funds might be open a new warehouse or store location or to lease bigger offices.
Understand the Different Loan Options
Not all business loans are the same. Knowing the type of loan that will best help your company and having a clear reason and understanding of why that loan is the best option will improve the likelihood of a bank approving your loan application. For example, a business line of credit is a type of loan that allows you to borrow the amount you need, then repay it and borrow more if necessary. It is similar to a credit card, but typically has lower interest rates.
In the case of an installment loan, your company receives a lump sum amount which you repay on a set schedule. Once the entire amount is repaid, you don’t have the option of borrowing more, unless you apply for an additional loan.
Have a Plan for Repayment
Having a clear, well though out plan for repaying your company’s loan is likely to improve your chances of getting approved. Have some sort of collateral or cash reserves that you can tap in case business is slow or your revenues aren’t what you expected can help put a lender’s mind at ease and can signal to a bank that your business isn’t likely to default on the loan.
A business loan should help position your company for success. Working with a virtual CFO can help your business prepare for the loan application process and increase its chances for approval. The team at New Direction Capital is here to help your company grow and reach its financial goals. Contact us today to learn more.
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09 Mar 2017
No two employees are exactly alike. Yet, for years, conventional workplace wisdom argued that everyone should come in at one time of day and leave at another. Today, the workplace looks a lot different. Many jobs can be performed on a more flexible schedule, allowing employees to work at home at some times or to adjust the amount of time they spend in the office based on the other commitments and demands in their lives.
While it might seem as though encouraging flexibility in the workplace will lead to a drop in employee productivity, the opposite is usually true. Several studies have found that employees who are given the opportunity to work from home or more control over their hours are generally happier on the job and more likely to get work done. Whether you are transitioning away from a traditional 9 to 5 model or simply want to give your employees more breathing to increase their on-the-job satisfaction, there are a few ways you can make your workplace more flexible.
Open Up Scheduling
Some people enjoy waking up early in the morning, accomplishing all they need to accomplish, and wrapping up their day by 4pm. Others are better suited to later hours while still others might benefit from a split schedule that allows them to work in the office in the morning, then pick up their kids at school and finish out the rest of their day working from home.
While an open and flexible schedule won’t always for work for every industry, it can work in many companies. As long as everyone is on the same page and as an idea of who will be in office and when, or who will be working at home and when, your company should be able to easily transition to a more flexible and open schedule.
While the traditional benefits such as health insurance and an employee-sponsored retirement plan are appreciated by many employees, there are a few additional perks or benefits you might consider offering to improve your employee’s work-life balance or to make your company’s workplace more flexible. One option might be to offer daycare in the same building, for a reduced cost. Another might be to encourage employees to get involved in their communities by allowing them paid time off for volunteering or other service projects. The time off would be in addition to regular vacation or personal days. Some companies also offer perks such as paid workout time or paid continuing education.
It might seem counter-intuitive to give your employees time to work on another projects or to hit the gym. But being more flexible when it comes to work-life balance will pay off for your business in the long run. For example, if your employees are encouraged to go to the gym, they are likely to be healthier, which can mean fewer sick days taken. Becoming known as the company that encourages volunteer projects can also do a lot when it comes to increasing people’s perceptions of your company.
Provide Some Feedback and Training
Transitioning from a workplace where everyone is in the office at the same time every day to one where some people work remotely or some people work opposite schedules will require some period of adjustment. Providing your team with training and feedback as you work through the transition can help make it a smoother one for all involved. For example, you might consider offering a tutorial on how to use tools such as Skype or Slack to help employees stay connected to each other when they aren’t in the same building. You might also consider offering time management training to employees who might not be used to working independently.
Part of being a flexible workplace is learning to adapt and adjust as needed. Although many employees are more productive working on their own schedule or from home, just as many fare better under the traditional confines of 9 to 5. Alternatively, it might turn out that programs you thought would benefit your employees aren’t very useful at all. Knowing what to keep and what to get rid of will help your company continue to grow and thrive.
The team at New Direction Capital is here to help your company on its path towards growth. To learn more about the virtual chief financial officer services we offer, contact us today.
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