Business Finance Best
Practices
Welcome to BABM Business Finance
Best Practices where you can read succinct articles
online. The Business Finance articles will provide you with valuable
information that can be immediately implemented to help
take your business and personal success to the next
level.
Raising Capital
By Penny Hulbert
Published: November 2007
You own a consumer goods
company in which 90% of your sales take place between
November 1 and December 31st. You’ve been in business
for 10 years, so you know that you will receive orders
in August because it takes 4 months to make your goods.
Your business was very stable and steady until some of
your products were featured on the Oprah Winfrey Show.
Your projected sales for this year have quadrupled. You
realize that you will need far greater working capital –
and money! – to make it through your sales season this
year. You head down to your local bank, where you’ve had
your $500,000 line of credit for two years. You ask for
an increase to $3,000,000, which you’ve calculated is
what you’ll need to accommodate your growth. Your banker
hems and haws and says he’ll let you know. You call back
a few weeks later to learn that your banker is on
vacation. Another week elapses. You have to place your
order for raw materials tomorrow and will need to draw
on your line of credit to pay for it soon. The bank
calls back and says that their lending limit is too
close to your loan request and they can’t increase your
line.
|
|
