14Apr, 2024

Indicator Insights: Using Economic Signs to Time Your Business Sale!

The best time for a business sale often aligns with strong financial performance and market optimism, typically seen in late spring or early fall. Of course, to optimize your timing to sell is when your business showcases its full potential and industry trends peak, ensuring you strike when the iron is hot for maximum gain. But what happens when the economic signs show slow down?

When contemplating the sale in today’s market of your well established and seasoned business, is already a challenge market. Then as you consider retirement or face health-related challenges, timing isn’t just a detail—it’s everything. Maximizing your exit strategy is the art of timing your exit from the business can drastically affect both the financial outcome and your emotional closure. Economic indicators are valuable tools in this decision-making process, providing insights that can guide you to choose the most opportune moment to sell.

Understanding Economic Indicators

Key Economic Indicators to Watch

When planning the sale of your business, keeping an eye on several crucial economic indicators can provide a clearer picture of the market environment. These include:

GDP Growth Rates: A strong GDP growth suggests a healthy economy, potentially more favorable business selling conditions.
Unemployment Rates: Lower unemployment rates typically signal economic strength, suggesting more spending power and business activity.
Consumer Confidence Index: High consumer confidence can indicate a willingness to spend, beneficial for business sales.
Stock Market Trends: A bullish stock market often reflects economic optimism, which can be positive for business valuations.

Interpreting These Indicators

Each of these indicators tells a part of the story. For instance, rising consumer confidence might suggest that it’s a good time to sell consumer-facing businesses. However, an experienced business advisor would caution about oversimplifying these interpretations. It’s the trend and the interaction between these indicators that often provide the most actionable insights.

Just recently..

I worked with the owner of a popular local restaurant who decided to sell his business as he was nearing retirement. We noticed signs of an upcoming economic downturn, as he was experiencing a gradual drop in consumer spending. Several other restaurants in the area have already closed, so deciding to list the business for sale just before the recession hits, was his optimal concern. We managed to close the deal favorably, and created a win-win for both the seller and the buyer.

Sadly, we have many businesses that will not complete the sale due to the economic headwinds. Being flexible about price and terms will help your business appeal to future buyers. So consider whether you really want to sell now, or you’re willing to hang on for the next 10 years.

Timing Your Sale for Retirement or Health Reasons

Assessing Personal and Business Readiness

Timing a business sale isn’t solely about market conditions; it’s also about your personal readiness. Are you financially prepared to retire? Does selling your business align with your health needs? These personal factors must be synchronized with economic opportunities for a satisfying exit.

For business owners facing health issues, the need to sell might be more immediate. In such cases, understanding the current economic climate becomes crucial to ensure you do not sell at a disadvantage. Strategic use of economic indicators can guide you in making an informed decision even when time is of the essence.

Strategic Planning for Selling Your Business

Preparing Your Business for Sale

Enhancing your business’s appeal through meticulous financial records, operational efficiencies, and transparent dealings can significantly influence the sale process. Employing professional advisors can also provide a competitive edge, offering expert insights into when and how to market your business for sale effectively.

Exit Strategies and Their Economic Dependencies

Choosing the right exit strategy—be it a gradual transition with a long-term involvement or an outright sale—depends significantly on prevailing economic conditions. A robust market could facilitate a straightforward sale, whereas a weaker economy might require a more structured exit to maximize returns.

Case Study: Overcoming Economic and Personal Challenges

Consider another client with a manufacturing business. He was already experiencing a downturn in sale and it caused high stress which resulted in serious health issues. By closely monitoring economic forecasts and preparing the business for sale meticulously, we successfully navigated through these dual challenges, securing a deal that respected his health circumstances and financial expectations.

Conclusion

Using economic indicators to time the sale of your business can significantly enhance the outcomes of your strategic decisions. Whether you are driven by personal reasons like retirement and health or looking for the best financial return, understanding and leveraging these signs can lead to a more controlled and beneficial sale process. Always consider aligning your personal goals with economic realities and seek professional advice to navigate this complex landscape effectively.

At Business Loan Solutions, we advise businesses of all shapes and sizes to face challenges with a positive focus, strong determination and out-of-the-box thinking. If you have questions, set up a time to talk. Our advisors are experts in their field and can help you navigate these difficult times.

1Apr, 2024

Volatility Meets Opportunity: Why its the perfect time to flip businesses.

Why It’s the Perfect Time to Flip Businesses

They call it the Golden Era of Opportunity when volatility meets opportunity, and this is one of those times. It’s a swan event normally reserved for the market at large, but in today’s ever-evolving economic landscape, the concept of flipping businesses has surged to the forefront as an entrepreneurial strategy. This practice, akin to the real estate flip but within the corporate sphere, involves acquiring underperforming or undervalued companies, enhancing their value, and reselling them for profit. As we delve into this dynamic arena, we uncover why the present moment is an unparalleled opportunity for business flipping and the infinite possibilities to exit on the upside. Here’s why…

“It’s the Golden Era where Volatility meets Opportunity.”

The Rise of Market Opportunities

Sixty-five percent of the small business market it owned by the baby boomers who are at a stage of retirement or experiencing health relate issues. Thereby, the current market is teeming with opportunities for the keen-eyed investor. The digital transformation wave, accelerated by recent global events, has opened new avenues for growth and innovation. Enterprises that can swiftly adapt to online platforms, e-commerce, and remote work environments are witnessing exponential growth. This environment is ripe for entrepreneurs to identify businesses lagging in digital adoption, implement necessary changes, and position them advantageously for sale.

Financial Flexibility and Market Dynamics

Today’s market dynamics are characterized by fluctuation and unpredictability. However, within this volatility lies opportunity. Through diligent market analysis and trend identification, flippers can anticipate shifts and position their businesses to capitalize on opportunities where none exist. Interest rates remain historically high, providing a challenging financial environment for borrowing. This in-accessibility to capital challenges entrepreneurs to get creative in potential flip opportunities with minimized upfront capital. It’s more about the deal structure and exit strategy than the business itself. Moreover, the proliferation of venture capital, angel investors, and special funds, are hungry for the next big success story, ensuring that promising flips can secure the necessary funding to execute a successful transformation.

Technological Advancements and Operational Efficiency

The relentless pace of technological innovation offers a double-edged sword: while it renders some business models obsolete, it also creates avenues for revamping and introducing new revenue streams. Entrepreneurs adept at leveraging technology can transform struggling businesses into thriving enterprises.

Not to mention that technological innovations have dramatically reduced the barriers to entry for optimizing business operations. Tools for digitizing the business, such as: streamlining processes, enhancing customer experiences, and automating marketing efforts are more accessible and affordable than ever. Entrepreneurs can leverage technologies like AI to quickly improve a business’s operational efficiency, thereby increasing its market value and attractiveness to potential buyers.

Strategic Acquisitions for Competitive Advantage

In a marketplace where competition is fierce, acquiring a business can be a strategic move to eliminate rivals or gain a competitive edge. Entrepreneurs can identify potential acquisitions that offer synergies with existing operations, providing a fast track to expanded market share, diversified product lines, or access to new customer segments.

The Evolving Consumer Behavior

Consumer preferences have shifted dramatically, with an increased emphasis on sustainability, personalized experiences, and ethical practices. Businesses that can pivot to meet these contemporary demands are better positioned to capture a significant market share when it is time to flip. Flippers who can identify consumer trends and reposition their acquisitions can drive substantial value growth.

But don’t go it alone. Surround yourself with a team of experts who can contribute to the flip and execute action plans will position you to take advantage of this very unique market. As we look to the future, the practice of business flipping is not just an investment strategy but a testament to the transformative power of entrepreneurial vision and execution. In this golden era of opportunity, the question isn’t why you should consider flipping businesses, but why you haven’t started already.

Business Loan Solutions can be that partner. Feel free to give us a call at 813-995-9595 or schedule a call.

30Mar, 2024

Investors Look Back to Look Forward – Is this a revisit of 2008?

When I look at the state of affairs in today’s economy, I am quickly reminded about the Great Recession in 2008 and subsequent years. It was an impactful time for me personally. I had just left my high paying corporate job to be in commercial real estate full time. I remember thinking, ut oh….what did I just do? You see, even though I had been in real estate almost all of my life, as a newbie in the commercial industry fulltime, I had to learn a thing or two. I went from commercial real estate agent to commercial real estate therapist. I listened to investors who lost everything including $80m in one day, to the boats, cars, houses, wife kids and even the dog moved out. More importantly, I listened, I observed and I learned what not to do. I asked questions from veterans in the industry, what is your strategy to get through the awful financial time? Here’s a culmination of what I learned.

Diversification is Key: One of the most significant lessons from 2008 is the importance of diversifying investment portfolios. Relying solely on one market or property type can expose investors to heightened risks during a downturn. Spreading investments across different assets and locations can act as a safety net during economic upheaval.
Avoid Overleveraging: The 2008 recession demonstrated the dangers of excessive borrowing and leverage. Maintaining a reasonable debt-to-equity ratio helps investors weather the storm during economic downturns, preventing foreclosure risks and financial strain.
Research Market Fundamentals: Understanding the local market dynamics is crucial for making informed investment decisions. Pay attention to factors such as job growth, population trends, and infrastructure development, as these elements can impact property demand and rental income stability.
Prepare for Volatile Markets: Recessions often lead to volatile markets. Being prepared for fluctuations in property values and rental rates enables investors to react swiftly and adjust strategies to minimize potential losses.
Cash Reserves are Lifelines: Maintaining sufficient cash reserves acts as a buffer during challenging times. Having readily available funds allows investors to cover operating costs, mortgage payments, and take advantage of new opportunities that may arise amidst the downturn.
Long-term Vision Trumps Short-term Gains: During periods of economic uncertainty, it’s crucial to adopt a long-term investment perspective. Avoid speculative investments driven solely by short-term gains and focus on properties with stable income potential and enduring value.
Adaptability and Flexibility: In times of recession, markets shift, and investor preferences change. The ability to adapt and be flexible with investment strategies is crucial to surviving and thriving in a changing economic landscape.
Analyze and Stress Test Investments: Before committing to a real estate investment, thoroughly analyze the property’s financials and stress test them against different economic scenarios. This process can help identify potential vulnerabilities and allow for appropriate risk mitigation measures.
Consider Contrarian Investing: Opportunities often emerge during economic downturns, and contrarian investing involves going against the prevailing market sentiment. Identifying undervalued properties with strong growth potential can lead to substantial returns when the market rebounds.
Learn from Past Mistakes: Lastly, one of the most valuable lessons from 2008 recession is to learn from past mistakes. Analyze what went wrong during the downturn, both on a macroeconomic level and in individual investment decisions. This retrospective evaluation can help investors refine their strategies and build resilience for the future.

While we know that this is not a repeat of 2008, this economic downturn will The upcoming recession may present challenges for real estate investors, but it also offers valuable opportunities for growth and learning. By reflecting on the lessons from the 2008 crisis and applying them to today’s market, investors can position themselves to make informed and prudent decisions. Remember, knowledge, adaptability, and careful planning are the cornerstones of recession-proof real estate investing.

These are lessons from 2008 that my clients learned and I learned through them. As always, we are here to answer your specific questions and help provide a guide when it feels like things are going sideways. Call us at 813-995-9595. We got your back.

11Feb, 2024

Who says money doesn’t grow on trees?

22Oct, 2023

INVESTORS: How to avoid financial ruin in CRE deals…

Nearly 65% of investors in CRE do not know when their loans are due. As we navigate through the dynamic economic landscape of today, waiting for the bank to call and renew your loan is too late. With increasing interest rates for longer, understanding and leveraging information in the finance industry becomes more crucial than ever. Our commitment to guiding investors in safeguarding their capital and real estate investments remains unwavering. It’s disheartening to witness the impact of bankruptcy and foreclosures on investors, often resulting from manageable circumstances. To assist you in thriving in the commercial real estate market while avoiding financial pitfalls, here are a few strategies:

Conduct thorough due diligence on your CRE loans and promissory notes. Many investors overlook the importance of in-depth analysis of their financial instruments. It’s essential to conduct comprehensive research on your portfolio to identify the history of your loans, including previous ownerships and payments. Surprisingly, some loans might be prepaid, which could reveal untapped equity in properties you’re involved with. This equity, once identified, can significantly enhance your investment strategy. Our expertise lies in uncovering these opportunities, providing a unique advantage to our clients.
Secure your REEIP Trust Claim(s). A significant number of properties are likely eligible for a REEIP (Real Estate Equity and Interest Protection) Trust claim, largely due to overlooked or misunderstood financial transactions by banks. Identifying such scenarios can lead to reclaiming equity lost in previous transactions, essentially recovering value that rightfully belongs to you. This process is directly linked to thorough due diligence and understanding the nuances of your property’s financial history.
Property Tax Adjustments. As property values begin to decline, especially highly valued commercial real estate, the local assessors office may keep the high valuation on record, thereby keeping your tax bill high. In order to change the valuation, you need to appeal the value with the property assessors office. This doesn’t happen over night, so do not wait until October 31st to begin the paperwork.
Changing market trends and valuations. In today’s volatile market, it is also vital to keep abreast of changing regulations and market trends that can affect real estate values and investment viability. For instance, understanding the impact of interest rate changes, economic downturns, or legislative shifts can provide investors with a strategic edge, allowing for proactive adjustments to investment strategies. Additionally, leveraging technology and analytics can offer deeper insights into market conditions, property valuations, and investment opportunities, enabling more data-driven decision-making.
Network of knowledgeable professional. Moreover, building a network of knowledgeable professionals, including real estate agents, attorneys, and financial advisors, can be invaluable. These relationships can provide you with access to insider knowledge, advice on complex legal and financial issues, and opportunities that may not be widely known to the public. Engaging with the community and participating in real estate forums and seminars can also enhance your understanding and strategies within the industry.
Sell Now and live to invest another day. Finally, selling your commercial real estate portfolio can help mitigate risks associated with market volatility, especially if your loans are due in the next 5 years. Conversely, investing in different types of properties, such as residential, commercial, and industrial, or in various geographic locations, can spread risk and increase the potential for steady returns.
Sustainable, Energy, and Government. If you need to hold on, now is a great time to invest in SEG programs that will reduce your carbon footprint and will increase the future value for when the commercial real estate market does return. Embracing sustainability and considering environmental impacts when making investment decisions can also appeal to a broader market, potentially increasing property values and attractiveness to tenants and buyers.

The path to success in real estate investment is multifaceted and requires a holistic approach that encompasses market analysis, due diligence, and continuous learning. By adopting these strategies, investors can not only avoid common pitfalls but also position themselves for long-term growth and success in the ever-evolving real estate market.

Investing in commercial real estate is a complex endeavor that requires a blend of knowledge, diligence, and access to the right information and resources. By staying informed about the financial mechanisms at play within the real estate industry, investors can make more informed decisions, navigate challenges more effectively, and unlock new opportunities for growth and stability.

We have seen a few downturns and we are here for you to answer questions, provide guidance and help navigate these unknown and challenging times. Call us at 813-995-9595.

27Sep, 2023

Partnerships – Til Death Do Us Part?

26Aug, 2023

It’s Baffling How Little Thought Owners Put Into Maximizing Business Value When Preparing for a Sale

When the time comes to sell a business, owners naturally want to obtain the highest possible return on their investment, right? Unfortunately, many owners overlook the significance of how to prepare for a sale, leading to missed opportunities and undervalued businesses. Maximizing business value not only ensures a more substantial financial gain but also signifies the culmination of years of hard work and dedication.

maximizing business value
prepare for a sale

I am always shocked speaking to business owners when they have finally made the decision to sell; invariably, the price is too high and they leave money on the table at the same time. Kelly, how can the price be too high and be leaving money on the table? That is a great question. They make a classic mistake….going for a valuation too soon and not covering all of their basis.

As business owners, the thought of selling your company might not be at the forefront of you mind, much less considering maximizing business value because selling is often an emotional decision rather than a strategic one. It’s not your fault. You have been told to “get a valuation up front, so then you know what you’re dealing with.” Unfortunately, that’s all wrong. However, it is crucial for entrepreneurs to recognize that maximizing the value of their business should be a continuous and strategic process. This article delves into the importance of preparing a business for sale, outlines steps to maximize its value, and emphasizes the human aspects and buyer demands that can significantly impact the overall worth of your company.

Understanding the Sale Process

Before delving into how to maximize business value, it’s crucial to understand the sale process itself. Preparing for a sale involves meticulous planning, financial evaluation, and strategic decision-making. Some common mistakes include undervaluing the company, neglecting necessary improvements, and insufficiently considering legal and compliance matters. To really understand the complexity in today’s market of selling your business, check out Chapter 8 “Due Diligence and Closing the Sale” from Maximizing Your Exit Strategy: A Guide To Selling Your Business in Today’s Market. Click Here. In this chapter you will learn the thoroughness of the due diligence process and the steps it takes to close the sale. It takes more than wishful thinking; it takes dedication, persistence and patience.

Steps to Maximize Business Value

Conduct a Business BreakThrough Session

In nearly every business book I’ve read, they recommend getting an appraisal or business valuation as the starting point. So, everyone runs to get the business valuation first. However, that’s approaching the process of selling your business backwards. The first step in preparing for a sale is to conduct a comprehensive business e-valuation called a BreakThrough Session (BTS). A BTS systematically evaluates your business from a 5-point inspection perspective, i.e. finances, marketing/sales, operations including technology, production/equipment, and human resources.

Learn more about getting your personalize BreakThrough Session.

Schedule your 30-Minute Strategy Session

Professional appraisals are important, but it is too soon in the sales process and certainly not the place to start. We want to dig deep into your company provide you with an accurate understanding of your company’s opportunities to maximize business value. This third-party unbiased assessment serves as the foundation for subsequent improvement strategies, and eventually a business appraisal that has real concrete value.

Improve Financials and Profitability

Buyers are naturally attracted to businesses with healthy financials and a track record of profitability. Prior to a sale, owners should focus on improving financial metrics, reducing unnecessary expenses, gathering the supporting documentation and maximizing revenue streams.

Strengthen Customer Relationships

Strong customer relationships not only contribute to current profits but also enhance the company’s long-term value. Engaged and loyal customers are more likely to attract potential buyers and ensure a stable customer base post-sale. Plus the cost of good-will is priceless.

Enhance Operational Efficiency

Efficient operations result in increased productivity and reduced costs. Streamlining internal processes and optimizing resource allocation can substantially boost a company’s value. Managing inventory and cleaning out the closets are a good first step to supporting the financial picture.

Invest in Marketing and Branding

A well-established brand and effective marketing strategies can significantly differentiate a business from its competitors. Increased brand recognition can attract more potential buyers and elevate the company’s perceived value. All too often, companies overlook the importance of branding your brand in marketing materials and telling one consistent story across the board.

Develop a Skilled Workforce

Beyond financials and strategies, the human aspects of a business play a pivotal role in determining its worth. A strong company culture, dedicated employees, and a positive public image can sway potential buyers in favor of the business.

So, regardless of whether you have a formal human resources department, a competent and motivated workforce is a valuable asset. Business owners should invest in employee development, talent retention, and succession planning to demonstrate a sustainable and well-organized business structure.

Diversify Revenue Streams

Relying heavily on a single product or service can be risky for potential buyers. Unless they are looking to expand or supplement their own products and services, you might find an uphill battle to sell your company at the highest valuation. Diversifying revenue streams reduces this risk and positions the business as adaptable and capable of withstanding market fluctuations.

Protect Intellectual Property

Intellectual property, such as patents, trademarks, and copyrights, can significantly impact a company’s value. Ensuring proper protection of these assets is crucial during the sale process.

Streamline Legal and Compliance Matters

Untangled legal and compliance matters instill confidence in buyers. Addressing any outstanding legal issues and ensuring compliance with relevant regulations is essential. This also means, buyers will look for potential risks during the due diligence. By identifying and mitigating these risks in advance, sellers can maximize business value and make it more attractive to buyers.

Considering Perplexity and Burstiness in Maximizing Business Value

Apart from the traditional aspects of business value, it’s essential to consider perplexity and burstiness. Perplexity refers to the complexity and uniqueness of a business that makes it difficult to replicate, adding to its value. Burstiness refers to the potential for rapid growth and expansion, demonstrating the untapped opportunities that can attract buyers.

Engaging the Buyer: The Human Side of Business Value

Once you have your house in order and operating at peak performance, you want to engage with the buyer and make an irresistible offer they can’t refuse. To attract multiple buyers, create a compelling and professional presentation (commonly called a “pitch deck” or “information memorandum”) that showcases your company’s value proposition, financials, operations, management team, and future opportunities. It should tell the story of where you started and where the company is headed. Demonstrate potential for future growth that might involve developing new products, expanding into new markets, or increasing marketing efforts.

By following these strategic steps and considering both financial and human factors, you can significantly enhance the worth of your business. This preparation will not only lead to a more profitable sale but also serve as a testament to their hard work and dedication.

Want to learn more about maximizing your business value?

27Jun, 2023

Bridge loan terms tailored to meet your needs…

Bridge loan terms tailored to meet your needs..

Commercial real estate investors today are often asset rich but temporarily liquidity poor and need to access capital quickly in order to take advantage of a time-sensitive situation. Bridge loan terms tailored to meet your needs is your solution.

WE CAN CLOSE In as little as 5 days! We put our borrower’s needs first. We care about what you care about. We’ll create loan terms tailored to meet your individual needs.

Bridge loan terms to meet your investing needs.

About Business Loan Solutions

It is a long established fact that the business of lending money is ever changing. As a business owner or investor, you need to consult with an expert, someone on your side to navigate the lending options from the BEST lenders in the market.

18Jun, 2023

Unlocking Hard Money Loans for Rental Properties

Are you an aspiring real estate investor looking to enter the rental property market but facing challenges in securing financing? Look no further—hard money loans may just be the solution you need. In this comprehensive guide, we will delve into the intricacies of hard money loans for rental properties, providing you with valuable insights on how to successfully secure funding and surpass the competition.

Understanding Hard Money Loans

In the realm of real estate investment, hard money loans have emerged as a popular choice for financing rental property acquisitions. Unlike traditional loans offered by banks or credit unions, hard money loans are typically provided by private investors or companies. These loans are asset-based, with the property itself serving as collateral, making them an attractive option for investors who may not meet the stringent criteria set by conventional lenders.

The Advantages of Hard Money Loans

Efficient Approval Process: Compared to traditional loans, hard money loans offer a significantly faster approval process. Private lenders prioritize the property’s value and potential profitability over the borrower’s credit history. As a result, the loan application and approval process can be expedited, allowing investors to capitalize on time-sensitive investment opportunities swiftly.
Flexible Terms: Private lenders have greater flexibility in structuring loan terms. This can be advantageous for real estate investors who require tailored repayment schedules or terms that align with their specific investment strategies.
Accessibility: Hard money loans are accessible to investors with lower credit scores or those who may have difficulty qualifying for traditional financing options. Since the loan is primarily based on the property’s value, borrowers with less-than-ideal credit can still secure funding.
Collateral-Based Security: With hard money loans, the property being purchased serves as collateral, minimizing the lender’s risk. In the event of default, the lender can recover their investment by selling the property. This collateral-focused approach allows borrowers with unconventional financial situations to secure funding.

Tips for Successfully Securing Hard Money Loans for Rental Properties

1. Research and Identify Reputable Lenders

Conduct thorough research to identify reputable hard money lenders specializing in financing rental properties. Look for lenders with extensive experience in the real estate market and a proven track record of successfully funding similar projects. Reading reviews, seeking recommendations from fellow investors, and actively participating in industry events can help you find reliable lenders.

2. Develop a Solid Business Plan

To enhance your chances of securing a hard money loan, develop a comprehensive business plan that effectively showcases the investment potential of the rental property. Include key information such as the property’s location, market demand, projected rental income, and your detailed strategy for managing and maintaining the property.

3. Gather Required Documentation

Prepare all the necessary documentation to support your loan application. This typically includes detailed property information, financial statements, credit reports, proof of insurance, and any additional documents requested by the lender. By providing a complete and well-organized package, you demonstrate professionalism and dedication to the investment opportunity.

4. Highlight Real Estate Experience

If you possess prior experience in real estate investing, make sure to highlight it during the loan application process. Demonstrating a successful track record can instill confidence in lenders and significantly increase your chances of loan approval.

5. Negotiate Favorable Loan Terms

While hard money loans often come with higher interest rates and fees compared to traditional loans, there is room for negotiation. Carefully review the proposed loan terms and engage in open discussions with the lender to identify areas where more favorable conditions can be achieved. Building a strong rapport and working closely with the lender can lead to a mutually beneficial agreement.

In Conclusion

Hard money loans offer a valuable financing option for real estate investors venturing into the rental property market. With their quick approval process, flexible terms, accessibility, and collateral-based security, these loans provide the necessary financial support to kickstart your investment journey. By conducting thorough research, developing a solid business plan, gathering the required documentation, highlighting your real estate experience, and negotiating favorable loan terms, you can position yourself ahead of the competition and secure the hard money loan you need.

11Apr, 2023

Worries about a recession?

Worries about a recession? At BLS we are committed to help you both personally and professionally weather the economic storms. Here are some thoughtful tips to hedge against the economic headwinds. There are several financial strategies that individuals and businesses can consider preceding an economic recession:

Personally….

Build up an emergency fund: Having an emergency fund can help you weather financial storms during tough times. Aim to have three to six months’ worth of living expenses saved up in a high-yield savings account.
Pay off high-interest debt: If you have high-interest debt, such as credit card balances or personal loans, prioritize paying them off before the recession hits. This will reduce your financial obligations and free up more money to cover other expenses.

3. Diversify your investments: Don’t put all of your money in one basket. Consider diversifying your investments by spreading your money across a range of assets, including stocks, bonds, real estate, and commodities.

4. Re-evaluate your budget: Take a close look at your budget and identify areas where you can cut back on expenses. This will help you free up more money to save or invest.

Business….

Build up cash reserves: Just like individuals, businesses should have an emergency fund in place to help them survive during tough times. Aim to have enough cash reserves to cover at least three to six months’ worth of operating expenses.
Diversify your customer base: Don’t rely too heavily on one or two major customers. Instead, diversify your customer base by targeting new markets and customers. This can help you weather downturns in specific industries or regions.
Reduce debt: If your business has a lot of debt, consider refinancing or consolidating your loans to reduce your monthly payments. This can free up cash flow to help you weather a recession. Consider selling under performing or non-performing assets early while there is a market for the asset. As values decrease, you may find yourself in a pinch to wholesale to the lowest bidder.
Control expenses: Take a close look at your expenses and identify areas where you can cut back. Consider renegotiating contracts with suppliers, reducing staff or hours, or implementing cost-saving measures such as energy-efficient lighting or telecommuting.
Maintain a strong relationship with lenders: If you need to borrow money during a recession, it will be easier if you have a strong relationship with lenders already in place. Maintain open lines of communication with your lenders and keep them updated on your business’s financial health. The rule of thumb is, lenders only lend to those who do not need it. So, apply for a loan early in a recession. It is better to have it and not use it, then to be denied on your loan request when you need it the most.
Focus on customer retention: During a recession, it can be harder to attract new customers, so it’s important to focus on retaining the ones you already have. Consider offering loyalty programs, discounts, or other incentives to keep your customers coming back.

Above all maintain a long-term perspective: Remember that recessions are temporary and that the economy will eventually recover. Avoid making rash decisions based on short-term market fluctuations and instead focus on your long-term business goals.

By implementing these financial strategies, businesses can position themselves to weather an economic recession and emerge stronger on the other side.

It’s also worth noting that it’s never too late to start implementing these strategies, even if you suspect a recession is already underway. By taking steps to shore up your finances, you’ll be better equipped to weather whatever economic challenges come your way.

Let us know which steps (if any) you are taking to not only survive, but thrive in 2023!!

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