The Secret to Finding Capital For Your Business
Are you seeking capital to fund growth or innovation plans for your family business? I can tell you where to get cash -- and get it instantly. There’s no paperwork to complete, and you don’t need to present your business plan to anyone.
All you need to do is stop taking so much cash out of your business. Reduce the “owner benefits” -- high salaries, luxurious perks, unneeded distributions -- and you might find the funds you need to help your company grow for the long term.
I know this advice sounds facile. But it’s advice that many family business leaders need to hear.
At our Private Company Governance Summit, held in Washington, D.C., in May, Gerry Czarnecki -- a veteran of the financial services industry who now is chairman and CEO of a consulting practice, The Deltennium Group -- noted, “The best way to generate liquidity is to improve operating margins.”
Czarnecki noted that business owners can get accustomed to high expenses -- and often, in privately held companies, these expenses include sizeable payouts to owners. “So owner benefit grows and grows and grows, and all of a sudden cash flow isn’t there to be able to grow the business,” Czarnecki said. “You have to ultimately focus on operating margins.”
Indeed, many successful business families we have covered over the years have credited the sustainability of tsheir companies to their family legacy of conserving cash.
If you cut back on the payments you award to yourself, could you avoid incurring debt, taking on an outside investor or another risky capitalization strategy? Just some food for thought …