5 Steps to save your business

Plenty of business people – entrepreneurs and otherwise – are dealing with real pain and life- and business-threatening situations. You can only hope for the best. Yet business owners, especially those whose current and future prospects aren’t off badly, have the ability to take advantage of whatever opportunities have arisen in these strange times.

That’s not to say you should prey on the misery of others, but there are some things you can do at this point that could pay off in the future.

1. Restructure your existing debt

Ideally, you don’t want to take on any more debt these days if you can help it . That might be a big “if” for a lot of businesses. Still, there’s plenty of opportunity to reduce your monthly payments.

Your business might be viewed very differently now by lenders. For example, perhaps you’re generating increased amounts of collateral, cash flow or credit. Even with a pandemic slowdown, your products or services are still in demand.

Refinancing should be on your table. Just by shaving a percentage point or two is going to cut your monthly debt service, which will put more money in your coffers. And in these troubled times, cash is king.

2. CBRN and other small business associations

You might now be eligible for a Small Business Administration-backed loan – or a better conventional bank loan.

The CBRN (Canadian Business resilience Network) could provide your bakery with advice as to any grants, loans or reimbursements you might be eligible for. You could also look into your local BIA and see how you can improve your visibility in your neighbourhood.

3. Loyalty crucial to lending

You may need to conduct a debt review to consider financing options as they currently stand.

That said, you have to be careful. Your current lender won’t want you to go, especially if the current arrangement is lucrative in their favour. They may try scare tactics, claiming you’ll lose flexibility if you change lenders or that you may risk running out of money.

Resist that pressure. Think of it this way: What’s more important – your business or your lender? Your lender is certainly looking out for itself first. You must, too. Remember, it’s always possible your lender could rework your deal, which could save you from awkward moments.

4. Loans (and loan restructuring) aren’t always the answer

More capital isn’t always the answer. Sometimes, it’s better to make do with less.

Entrepreneurs generally don’t want to scale back their operations because they’re too worried about growth. But few businesses grow in a straight line. There are ups and downs along the way and you might just want to minimize the damage.

Steps to take include deferring capital expenditures or deferring or reducing lease payments and non-critical vendor payments, if possible. By reaching out proactively to landlords, vendors and other contractor holder, you might be able to craft some breathing ground.

On the unpleasant side, you could think about furloughing some employees or even pay cuts (if you choose the latter, make sure you cut your pay as well.)

5. Give yourself some credit

This advice – which isn’t heeded nearly often enough — applies when your company is doing well and when it’s not. You should open a line of credit.

A credit line gives you peace of mind because you have a ready reserve to tap. And it gives you a great deal of flexibility. Say you get a short-term opportunity to buy a stockpile of a key raw material at a ridiculously low price. With a credit line, you can take advance.

You only pay interest on a credit line if you borrow from it – and there’s no requirement for you to do so. The credit line can sit there untouched, if need be.

In summary, now’s a time when your goal may well be simply to ride out the next few months. That’s fine.

“Riding it out” isn’t the same as doing nothing: By being proactive, you can not only make the most of a bad time, but position yourself for the inevitable rebound.

Ami Kassar is the founder and chief executive officer of Multifunding LLC, speaker, and author of The Growth Dilemma. He has advised the White House, The Treasury Department and The Federal Reserve Bank on the state of the financing markets. A nationally-recognized expert on business capital, Ami has helped over 1,000 entrepreneurs raise over $400 million of debt for their businesses. For more information on Ami Kassar, please visit www.AmiKassar.com.