We all like to start a New Year with a clean slate. While not always possible it does feel good. There is a saying to make room for the new we must get rid of the old. How many old tales are you chasing versus making room for new opportunities? We chose settlement as a way to get rid of the old in our company this year. We settled with two former partners this year allowing us to quit having to look back so we can put all of our energy into our future. Neither of these agreements were financial home runs but, they both had great emotional energy.
Credit is a good subject to target as the year closes. Many credit vehicles have mandatory dry periods that must be met as the year ends. Some clients that choose to voluntarily pay off lines sometimes find them reduced or closed all together. Terming out credit lines seems to be the new normal for many banks. There may be instances where not paying the line makes the most sense. Getting new credit is quite challenging in today’s world. Evaluating our options and developing a game plan is key in this area and especially in this credit environment we should focus on this. Credit is provided by more than just banks. Our own customers/suppliers routinely provide and use our credit. Sources such as SBA, factoring and private equity all play a role. Now is actually a good time to obtain credit as rates are historically low so do not look past a review. Sometimes strong companies have outdated credit that needs a fresh look.
Setting business accounting goals for the start of a year makes good sense. Goals that are precise are better than those too general. IE I want to make more money in 2012 can be improved by putting a dollar value and date by the goal. I will make 200k for the period ended Dec 31st 2012. Budgets are another item to consider for your 2012 resolutions. These give us a good measurement tool for our financial progress. There is no magic here. Take a look at the prior year to start. What changes have occurred or one time expenses in the next year that will not repeat. Will income rise, decline or stay stagnant? The real key to the process is the measurement ongoing not really the original document. None of us are fortune tellers so adjustments are continuously needed. It does raise financial awareness and make us look beyond our day to day. There is a saying I like called failure to implement. It does not matter how good the idea is if it stays hidden. Budgeting is a great resolution to make for any year, why not start now?
Sometimes looking ahead goes beyond the next year. We may have expiring leases that need attention. We are now evaluating this with several clients. If you have not noticed rental rates are very low. Many tenants are sitting on bad leases. Many times landlords are willing to negotiate for various reasons, more time on the lease, fear of loss at the end of term etc. Something is better than nothing in most cases. Equipment leases also need our attention. Many leases have notification periods that need to be met to avoid termination fees. Equipment leases are tricky and personally I like acquisitions as I feel they are less complicated. This is not only true for tenants but owners also need to evaluate their options. We have clients currently getting out of SBA loans. Nothing easy or pretty here but possible. I know companies that specialize in this area. It is amazing in this world if you look hard enough you can find almost anything.
There is the normal where folks will tell us it cannot be done which may be usually true and then there are the exceptions which is where the action is. Loan modification is an example. Many tried few prevailed but several clients did accomplish this. Each one likely had unique issues. Short sales are another financial option taking place at a consistent pace. Have had many clients do this over the past few years. Some of these clients were by no means financially destitute either. It became a financial decision to stop throwing good money after bad. They were willing to take the credit hit and the bank was willing to take less for a non performing asset meaning they stopped paying. We have a client that recently gave back a seller carry back property. They did lose money but were continuing to lose and there was no end in sight. They chose to take the loss on sunk cost but make a stand for the future. The seller originally failed to negotiate and now will get a property back that has a diminished resale due to location and the market. None of these actions just fell out of the sky. They all arose from analysis and looking at the numbers and reviewing options. We call this process working on the business versus in it!
Let us help you plan for the future. Visit us at www.gyldecauwer.com or Call us at: 909/948-9990.