SurThrival: Financing


Financing tips to help you SurThrive in a down economy

Financial management and structuring is perhaps the most fundamental aspect of a small business yet often the most underemphasized by business owners. Particularly in an uncertain or declining economy, it is of utmost importance to evaluate your financial health and develop measures to maintain or improve it. This checklist can help you analyze your current financing practices and understand how to improve your credibility and strength as a borrower.


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  • Take advantage of low interest rates or longer term payments to consolidate debts and finance operations.
  • Maintain adequate cash reserves to support operations in case your cash flow becomes stressed. The recommended minimum ranges from six months to a couple years' worth of fixed and operating expenses.
  • Make sure you are actually borrowing less, and not just shifting your borrowing to other sources. For example, if your loans are getting paid down but your accounts payable and inventory are increasing, then you may still be "borrowing" just as much without realizing it and putting yourself in a dangerous liquidity position with trade creditors in the process.
  • Determine which of your assets and business activities are high and low-performing. Business owners who maintain a single set of financial statements instead of breaking them down can unknowingly sink profits from one business or department into another, jeopardizing their entire operation. Exercise proper cost accounting to assess which assets and operations are high or low performing.
  • Understand how you compare to others in your industry. Are your performance levels on par with similar companies? Work with your financial advisor or lender to study and understand Risk Management Association (RMA)/ North American Industry Classification System (NAICS), favorable industry performance measures and benchmarks on liquidity, solvency, debt, operating, financial, and efficiency ratios.
  • Make sure your personal finance practices support your business financing efforts. Demonstrating favorable credit and personal financial management during tough times shows your character and ability to weather financial challenges.
  • Work to improve your borrower-lender relationships. What can you do to improve your credibility as a borrower? Some examples might be sending financial statements regularly and communicating more frequently about your financial difficulties.
  • Talk to your banker about restructuring your debt. Whether your business is already in dire straits or you're worried that's where it is heading, your banker can help you assess and manage your debt payments.