Preparing for New Growth Opportunities in a 2010 Economy

By: Mike Semanco, President, Hennessey Capital

When we do see the light at the end of the proverbial tunnel, companies need to be prepared to handle the pent up demand which builds in challenging times.  Business owners have spent the last 18 months streamlining operations and cutting where possible.  Now is the time to begin planning for new opportunities so that when they arrive at your doorstep, you can welcome them in versus turning them away.  There are two critical needs which small business leaders are concerned about- access to capital and talent attraction. 

All signs indicate that credit markets will remain tight throughout 2010 so entrepreneurs need to be prepared to consider multiple sources that can work in tandem to meet their funding needs.  This means your working capital lender will probably not handle your real estate loan or equipment loan.  It may also mean that the cost of capital may be higher than in the past but with new opportunities in hand; the cost of saying “no” will be greater than the new cost of capital.  In regards to talent, the key will be finding individuals with the right skill set.  Candidates will need to be multi-dimensional and be required to take on new projects outside their comfort zone.  Companies will want to maximize their hires and accept the fact that overstaffed businesses are a thing of the past.  Consult with your professional advisors to get the most out of new opportunities.  Survivors will thrive if they are prepared.

Asset-Based Lending Grows in Popularity

An article from this Tuesday’s Wall Street Journal highlights the flexibility  that asset-based lending provides.  Weezabi LLC, the company highlighted in this story, is a prime example of how small businesses can use an asset-based line of credit to say “yes” to new business opportunities. Read the article

Five Reasons Why 2009 was a Good Year for the Commercial Finance Industry

By: Mike Semanco, President, Hennessey Capital

I don’t deny that 2009 was an exceedingly challenging year for businesses of all sizes. However, 2009 may prove to be a watershed year for the commercial finance industry. 
 
The economic crisis and simultaneous traditional credit drought created an opportunity for the commercial finance industry to step up to the plate and be recognized. The ability of many commercial finance companies to say “yes” to lending when many banks were saying “no,” often meant the difference between a business maintaining its position in the marketplace or closing its doors.
 

1. The industry reminded the business community why factoring and asset-based lending have a 500 year history as it stepped up to finance small to medium sized businesses when traditional lending was either tight or non-existent.
2. Asset-based lending and factoring garnered increased media attention this year, helping to educate business owners on the availability and value of such lending vehicles.
3. The industry gained a new level of respect because of the expanded role it played in commercial lending and was able to significantly reduce the stigma associated with the use of factoring and asset-based lending, further burying the “lender of last resort” moniker.
4. The industry benefited from the fallout in the broader financial services industry, presenting the opportunity to tap into some outstanding talent to further grow companies within the commercial finance field.
5. With more business owners taking advantage of the benefits of factoring and asset-based lending, users of commercial finance are now more likely to share first-hand experience on how commercial financing vehicles helped sustain or grow their business

A look at the annual Commercial Finance Association conference

By: Jeff Wright, Senior Vice President, Hennessey Capital

 

I recently attended the CFA Annual Conference held in Las Vegas. The theme throughout the conference was “Opportunities. With the current lending environment being what it is and access to capital tougher to acquire, plenty of opportunities exist for asset based lenders to help both small and mid-sized companies finance their working capital needs.

 

The event was highlighted by the key note speaker, Condoleezza Rice, sharing her experiences as the Secretary of State. She stressed that free trade is critical and that the U.S will be led out of the recession by the private sector investment and their willingness to take risk. Ron Shapiro, author of “Power of Nice” discussed how to be prepared. His eight-step methodical approach to being prepared and out performing the competition is

1. Understand your objectives
2. Plan with precedents
3. Know of alternatives
4. Define the interests
5.  Set your strategy
6. Do a timeline
7. Pick your team
8. Write a script

SBA Lending: Down But Not Out

Although SBA lending is down sharply in 2009 compared to 2008, the movement of new activity as of late, is a positive sign of good things to come.  Even a slight increase in activity will give entrepreneurs some level of hope that a bigger credit thaw will happen in 2010.  In the meantime, entrepreneurs need to be creative and think outside the bank box for financing solutions.  Asset-based lending, factoring, PO financing and equipment leasing will continue to be viable solutions to today’s financing challenges.

Credit Shortage Threatens Supplier Growth

Detroit Free Press writer Susan Tompor sheds light on the challenges that lie ahead for small to medium sizes businesses, particularly in the manufacturing sector. As analysts proclaim that the recession is over, how do small manufacturing shops access the capital they need to re-set production and re-hire workers? Read the article

Key Steps To Improving Your Collections Process: Podcast Episode 6

The most important part of the sales cycle is getting paid.If your company is not being paid for the product or service you are providing, you’re losing money on the work.

In this episode of Capital Conversations we take a look at how to make the collections process easier, how to overcome obstacles, and how to anticipate collection issues and recognize red flags to avoid problems in the first place.

Join us for a  chat with Candi Pavliscak, the Chief Credit Officer here at Hennessey Capital, to get the inside track on what you need to do as a business to ensure full and timely payment..

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Ditching the ‘Alternative Lending’ Moniker

by: Mike Semanco

As recently as March of this year, I was using the term alternative lending to describe our industry niche - but no more.  Moving forward, “alternative” will be removed from our sales, marketing and conversational lexicon. The word alternative generally connotes, outside of the mainstream, not as acceptable as the standard, a secondary when the best option is not available.  In an economy of unprecedented credit stress, the asset based lending/factoring industry has earned the legitimacy to take its rightful place as a niche financial lender - not an alternative lender. 
 
Factoring and asset-based lending are time-tested options for small businesses and remain a vital form of commercial lending after 500 years because they have the ability to sustain and grow a company when traditional bank financing does not fit or, in today’s economy, becomes  unavailable.  Indeed, rather than being an alternative financial option, our industry has shown leadership in many metropolitan credit markets. So, it is safe to say, that in this unprecedented economic climate, what once was considered “alternative” is now mainstream.  
 
Frustrated entrepreneurs and other traditional bank borrowers stymied in their efforts to obtain working capital are welcoming the opportunity to obtain financing through factoring and asset-based lending, finding it to be a credible and a solution-based approach.  Our industry has been given a unique opportunity to help small businesses continue to grow and expand despite the more traditional road blocks that stand in their way. They know that it is sometimes not the cost of financing (within reason) but the availability of financing that can make or break a company.  As an industry, we need to acknowledge the mainstream role that commercial finance is increasingly playing in small and medium-sized business markets.  The lender of last resort reputation can safely and permanently be laid to rest. The ongoing recession has created increased interest within the entrepreneurial community regarding factoring and asset-based lending. As an industry, we should embrace this increased interest and use it as an educational opportunity to remind small business owners that “alternative lending” isn’t so “alternative” any more. Niche financing, like factoring and asset-based lending services will not only help sustain many businesses during a dicey economic outlook, but will be a critical business growth tool long after the current recession ends.
 
There are no definitive answers as to how long it will be before we see traditional lending back in full force. Despite my faith in the commercial finance industry there is no doubt that it will be for the good of the business world if we resume normal lending patterns soon. In the meantime, commerce must keep moving forward if we are to prevent the collapse of business as we know it - and the niche commercial finance sector is taking up the mantle.  There’s no alternative but to celebrate such industry leadership.

4 Things Small Business Investors Are Looking For

Whether you are already in business and searching for additional capital and/or a new finance parter, or you are considering embarking on a new entrepreneurial adventure, there are some key criteria investors will consider:

1. A business plan that describes the market opportunity. The value the the business will deliver and its acceptance in the marketplace must be clear. In short, there must be a compelling reason the business exists. NOTE: An executive summary is key. Most investors do not want to see, nor will they take the time to review a 50-page marketing plan.
2. A capable entrepreneur. Since their money will be in your hands, the entrepreneur must convince the investor/lender of his or her competence, commitment and integrty. You are the business.
3. A realistic financial plan. You need to know how much capital you will need, when you will need it and how it will be deployed in executing the business plan. Sure, $1 million sounds great to any business owner, but is that really your cash need and how to plan to use it?
4. An exit strategy. How and when will the investors get their money back and what is the expected return on their investment?

Southeast Michigan Has a Lot Going

It is easy amidst headlines of climbing unemployment and bankruptcies abound in Detroit to become disgruntled, frustrated and just plain depressed about the current economic climate and the region’s future. If that is how you feel, you should have been among the 400 individuals that gathered along Detroit’s picturesque riverfront to celebrate the accomplishments of some of Michigan’s most outstanding businesses in technology, professional services and more. The Automation Alley Awards Gala was an fantastic event dedicated to celebrating all of the great things happening in Southeast Michigan - and what prudent time to celebrate. Hennessey Capital was honored to be among those honored. We salute all of the small and medium sized businesses that are making a difference everyday in our region. View the complete list of winners

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