Happy Talk! Regarding the financing of Canadian business and trade credit in Canada, we can learn a lot about the mistakes we and others have done in the past, right. We are full of words today, but our other favorite is that there are a lot of tuition fees payable to the school of business experience.
In many cases, when it comes to business finance can correct an error – the worst case is of course of business failure, bankruptcy, etc. These experiences are the owners and business managers must tell us … “resilient”
Securing funding is badly one of the worst mistakes that your company can do .. And it does not necessarily tell the march rate, this means the structure and purpose of financing. And when you do not know how and when to raise capital or monetize assets that compounds the problem.
From your perspective of lenders, it is all about risk and the amount they are willing to take with your business. So you become a winner when you get the funding you need and your bank or commercial finance company considers not taking excessive risks. This is a great point to remember.
To make their loans and financing “less risky” banks and other finance companies are asking personal assets as collateral. While in many cases which can not be avoided business owner should take great care to more than pledge their lender. This error becomes very expensive in the same failure in business.
Matching the right word to your funding is essential. Remember that a bank or finance company, leasing company, etc. still feels less sure about a longer term. Why? Just course because the long-term future is uncertain for any business.
Many companies are forced to give up some equity in their early years. This could be an investor, lender, partner / strategic partner, etc. When you do this, you are sure to give high yields at a future time.
We could not possibly count the number of times we felt that customers were simply lined up on the wrong companies, people and funding. In a perfect world, you want to deal with people who know your business and industry.
We hear a lot about “bootstrapping” these days. Essentially, it is using “friends and family” and personal savings, as opposed to seeking external financing. It’s good and bad as we think. You have less or no external debt, but again you pledge personal assets that will ultimately affect your personal credit history. The best bootstrapping arrangement is one in which you feel very confident about future cash flows.
What is the key takeaway today? Just as the financing of Canadian companies, either through debt or cash flows and commercial monetization of credit assets to be taken in the context of short-term, long-term funding and daily operations. There are serious implications to take “other people’s money.” You can pay a lot of expensive tuition fees when you do not understand your needs and potential sources of commercial credit in Canada.
Search and talk to someone you trust, financing advisor credible Canadian companies that can help you with your business credit needs with the benefits of the experience.