Steps you can take to improve, grow your business in 2020

The start of the year offers a good opportunity for business owners and executives to evaluate where their company is, where they want it to get to and then put a plan together to achieve their objectives. While 2019 was a strong year for businesses, economic and political factors could affect the landscape going forward. It’s important both to establish a plan to attack the market in the coming year and also re-evaluate and adjust that plan when circumstances change. Sometimes that process is aided by getting the input of key business partners.

“Companies and owners that put together a plan, execute that plan and find ways to work successfully with partners should be able to leverage favorable market conditions to grow their business,” says Kurt Kappa, Chief Lending Officer at First Federal Lakewood.

Smart Business spoke with Kappa about evaluation and planning strategies that can help companies unlock their potential in 2020.

What financing opportunities should business owners and executives consider and/or potentially act on in the coming year? 

When exploring financing opportunities for 2020, there are two areas business owners and executives may want to consider — their current cash position as well as utilizing debt. 

Companies should look at their cash position and how it sets them up for future growth. With capital as cheap as it is, growth can be funded via loans or lines of credit instead of cash. If a  company is cash positive at the moment, it is a good time to talk with your banker about tapping into a working line of credit.

On the flip side, debt in 2020 looks as if it will continue to be inexpensive, so it may be a good time to fund a business expansion, whether that’s through organic growth or through acquisitions. When it comes to the latter, inexpensive debt can be used to help fund an acquisition, but the high company valuations might mean it will take buyers time to find the right opportunity. 

What unique opportunities or conditions exist in the market and how could they affect a business? 

Many Northeast Ohio companies are entering succession planning and ownership transition periods. This is mostly because baby boomers who are in leadership or ownership positions have reached an age where they are looking to transition, either through succession planning or through a sale. For these owners, now is a good time to really evaluate which path is best: a sale of the business or by growing and bringing on other team members to run the business in their place. 

For those business owners who have been considering an exit, conditions in 2020 are favorable for selling. And given the high valuations, owners should be able to receive a good price for their business.

What conversations should business owners and executives have with their bankers this year as they try to make the most of 2020?

Business owners and executives should talk with their banker about all that is happening, and what they would like to happen, with their business — what their growth objectives are, what could hold back their growth and how they can navigate those obstacles to achieve their goals. 

It’s common for business owners to get so caught up in running the day-to-day operations of their business that they often struggle to step back and take a bigger-picture look at the organization and where it should be headed. Taking some time to talk with a banker can create the opportunity to have an in-depth conversation about the strategic vision, get some outside perspective on how they and their organization are currently set up to achieve it and build accountability into the plan.

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