Is Your Small Business Ready for Growth?
by Lindsay St. Pierre, Vice President/Lender
First, I loathe talking about your business as ‘small.’ According to the SBA (Small Business Administration), a small business is defined as a company with 500 or fewer employees and average annual receipts under $7.5 million. I’ll be honest: if my hot sauce side-gig produced nearly that much and someone called it small, I might be offended.
Now that we have defined ‘small business’, let’s talk about how important it is as a small business owner to prepare for the future. Whether you have been in business for months or years, it’s imperative to have a path in mind for where you want the next couple of years to take you.
While that could mean different things to different owners, for this scenario let’s talk about growth mode and what that looks like from a banker’s perspective, since that’s what I’m here to offer you. (I’m not pushing hot sauce anymore.)
There are a few things you should think about as you plan for the future of your business. And while these questions may be challenging, it works best if you are honest with your answers. The numbers rarely lie, so clarity and honesty are important!
- How well do you really know your financials? I’m not saying you need to fire your bookkeeper and obsess over your P&L monthly, but do you take the time to sit down with him/her and identify areas where you might be overspending? Understanding your finances can help you manage cash flow, track expenses and understand key financial statements, leading to informed decision making, efficient operation, and long-term sustainability.
- How is your relationship with your CPA? It’s tax season: are you rushing to gather your receipts and stressing over year-end numbers, or are you calm, cool, and collected, knowing you’ve planned for this inevitable timeline? Effective tax preparation starts long before filing season. Keep your financial records organized throughout the year and it will pay off come April.
- What does your business NEED this year? Clearly defining your working capital needs and detailing your annual budget may not be the most exciting thing you do, but it could be the most important. Have you created projections for the next few years based on your growth plans?
BONUS: Did you know that you can get FREE help from a mentor at SCORE to help you with this? SCORE advisors can help you with various aspects of starting, growing, or exiting a business, providing free, confidential mentoring and resources, including workshops and online courses. Check with your Chamber of Commerce for a local SCORE chapter.
- Do you have a relationship with your banker? If the answer is a quick “No,” then please DM me! It’s important to work with a bank professional you can trust. You should be able to ask your banker questions before applying for a loan, and it’s also beneficial to have a bank that specializes in programs such as SBA lending. That way, you’ll have more options when you’re ready to expand or grow.
In today’s challenging economic environment, managing your financials is more important than ever. By preparing your business with the right financial documentation, a clear plan and expert guidance, you can increase your chances of successfully obtaining financing when needed. Partnering with the right bank and lender will make this process much easier for you, so do yourself a favor and reach out to someone from the Institution for Savings team today!