Stay Poised for Changing Marketplace

Wednesday, April 12 at 07:10 AM
Category: Business Banking
As National Small Business Week approaches (April 30-May 6, 2017), what can you say you’re doing to further your entrepreneurial dreams or bolster your business’s potential in 2017? The future looks bright — job growth is steady and consumer spending is rising. The National Federation of Independent Business reported higher overall optimism in the market; their findings were based on ratings related to business factors such as being a good time to expand and plans to increase employment (NFIB Small Business Economic Trends, February 2017). 

So what can you do to work toward enhancing your business and reaching goals? Running through a proactive assessment list at least yearly can help you identify opportunities for growth and revitalization. Arm yourself with these to do’s to stay poised for an ever-changing marketplace:
  • Cost Savings and Expense Monitoring
  • Annual Goal Setting
  • Competitive Analysis 
  • Tools and Trends Usage
Cost Savings and Expense Monitoring
In the spirit of working smarter, not harder, an essential business function is keeping an eye on the bottom line and using financial tools to manage expenses. You probably already have vendors providing point of sale, banking, accounting, or expense platforms to run your daily operations, but are there any specific capabilities they offer that you aren’t taking advantage of? If you have to pay for this with your current provider, is there another vendor that offers those capabilities as complimentary?
 
For example, many commercial credit cards offer budgeting or spending analysis tools you can leverage to get a better look at your finances. You could have access to an annual summary statement that itemizes and categorizes all transactions, even to the merchant level. This allows you to quickly see type of spending and category percentages to better monitor your budget. There are also tools to help you restrict spending or add users in real-time on your accounts. 

Look into streamlining your spending accounts to save time. If you have multiple business credit card accounts, take a look at which one offers you the best rates and rewards and consolidate. And many offer free balance transfers. 

Are there loyalty or rewards programs that give you bonuses, free products, services, or even cash back for your business? You probably have many of the same typical expenses monthly. Choose selectively where you spend, as well as what form of payment you use to maximize earnings. 

Annual Goal Setting
It is paramount to first consider the goals you want to reach as (at least) a partial measure of success to keep you on track. Separate them as essential versus aspirational/nice to achieve. Pick a month and week that makes sense for your specific business type — maybe it’s your low season in June — that you commit to yearly, concentrating on where you’ve been and where you want to go. It’s important to have clear objectives so you can create an actionable step-by-step plan for achievement. 

For example, Mike’s Coffee Shop needs to increase foot traffic and revenue. They therefore want to measurably grow their marketing reach and repeat customer base. As one part of the plan to reach this goal, they will train the staff to consistently tout their loyalty program and have customers sign up with emails and/or mailing info to reach a target list increase of 25 percent within a year while monitoring profits.

Competitive Analysis
It’s important to be aware of who and how many you are competing with for market share, what they offer comparatively and how they reach their customer. How does your business stack up to them, and what can you do better or differently to set your business apart? It’s all about keeping your business relevant and therefore driving interest and sales.
 
Perhaps you can’t be the leader, but you can set your products or services apart as a niche winner in your industry space. Maybe you don’t have every single product type or SKU the big box store down the street has, but you provide the best quality, unique independent vendor offerings or excellent individualized customer service otherwise unavailable. Specialization after competitive analysis could bring your business major revenue.

Tools and Trends Usage
There will always be something shiny and new claiming to help you better run your business; it’s important to be selective on which are worth the investment of your time and/or money. Here is a small sample of online tools applicable to just about any type of business. Most are either free or offer trial versions to test before you commit.

In today’s world, you don’t exist (especially to millennials) if you don’t show up in an online search. What is your online presence?
  • Website builder: Wordpress, Wix, Weebly, Jimdo, Yola 
  • Social media: Facebook, Instagram, Pinterest, Twitter, LinkedIn
  • Reviews and search: Yelp, Zomato, Google business listing (search and maps)
What about the tools you can use to help you create content and streamline professional marketing for your business?
  • Manage and schedule social media: Hootsuite, Everypost, Buffer
  • Graphics (flyers, social media images, newsletters, etc.): Canva, Piktochart
  • Survey customers or co-workers: Survey Monkey, Survey Gizmo, Google Forms
How can you more effectively collaborate and communicate? 
  • File sharing: Google Drive, Dropbox
  • Video conferencing: Skype, Google Hangouts, Cisco Webex
  • Project management: Trello, Asana, Freedcamp
Anytime you can shave off unnecessary expenses, achieve new goals and streamline your internal business processes, you make an impact to the success of your business. Any other tools or changes in your business you find helpful and want to share? Tell us in the comments on this blog or comment on our LinkedIn post on this topic!

Tags: Arvest Biz, Business Banking
 

Leases Versus Loans: The Best Option for Your Business Equipment Needs

Wednesday, April 05 at 02:20 PM
Category: Business Banking
Small business owners often bring their consumer mindset to running their businesses – particularly in the early years of owning. In many regards this mindset is helpful because they can more easily think like their customers.

One area where this mentality can hinder their progress is when it comes to the idea of leasing. Most entrepreneurs want to own their stuff. That’s why they became business owners. They often think leasing doesn’t make sense for the computers, TVs and furniture in their homes, as well as the cars in their garage, so why would it make sense at their company?

What they don’t realize is that there are many advantages to equipment leasing for small businesses.

One of the most important benefits is that leasing some of the equipment needed to run a business means that their access to capital for expanding or getting through a temporary downturn in business isn’t tied up in equipment loans. Every business has a limit to the capital it can access. If a new business ties up the majority of its lending limits by purchasing computers, software and other basic tools for the business then it may not have the ability to expand with another location or new equipment that might improve output or efficiency.

There can also be significant tax benefits for leasing equipment as, in many instances, the lease payments can be fully deductible against current earnings.

One area where equipment leasing is gaining in popularity is for technology-based or enabled equipment. Whereas a decade ago most technology equipment had a useful life of five or more years, the pace of innovation means a computer or computer-driven device may be effectively out of date within three years. If your computer equipment is leased, you will never find yourself with old, outdated equipment with limited ability to replace it. This isn’t just true of design firms, engineers and other creative businesses, in today’s world there are computers driving everything from farm equipment to the most basic manufacturing equipment.

Probably one of the most overlooked benefits of leasing rather than purchasing is what it does to small business’ balance sheet and what that can mean as the business grows. When you lease equipment, you avoid having too much long-term debt on your balance sheet. Your equipment is part of your regular business expenses, and that’s all. For the new business owner who may think it’s dangerous to have that expense, it usually isn’t much different than the monthly depreciation expense needed for the equipment that was purchased and is now a company asset. Leasing just makes for a more attractive balance sheet – which will be needed when the successful company is ready to grow and expand.

All of these benefits are why commercial and industrial equipment leasing has grown faster than traditional bank lending since 2009. According to the Equipment Leasing and Finance Association (ELFA), more than $1 trillion of investments in business plants, equipment and software were projected to be financed through loans, leases, or lines of credit in 2016.  

When considering a lease versus a loan there are several factors to consider. With traditionally smaller monthly payments, leasing can be a budget-friendly option if cash flow is tight or unpredictable from quarter to quarter. Leasing typically does not require the same requirements for approval that a traditional loan would. If a large sum for a down payment is a concern, leasing can be a great option.

There are many other things to consider when evaluating whether to pursue a loan or lease to equip a new business, expand an existing business or simply upgrade and replace current equipment. Call your bank or a leasing/finance company so they can help you determine what option is best for your specific situation and business needs. Don’t discount equipment leasing without fully understanding the possible short- and long-term benefits it can offer. 

Tags: Arvest Biz, Business Banking, Equipment Finance
 

Small Business Loans: What Does Your Bank Want to See?

Wednesday, March 22 at 07:05 AM
Category: Business Banking
Starting a small business is no easy feat for a multitude of reasons, and one of the largest hurdles for many entrepreneurs is securing funding. The 2016 Kauffman Index of Startup Activity* is a comprehensive indicator of new business creation in the United States and shows start-up activity continued to gain momentum in 2016, following the upward trend that began last year. In short, the latest recession is behind us, new business activity continues to grow and these new ventures need funding. Your local bank can be a great resource to help finalize your business plan, and put you on the road to securing the money you need. Arvest Bank shares three things entrepreneurs need to stand out to potential lenders. 
 

1. A thorough, yet realistic, business plan 

A business plan is a crucial part of an entrepreneur’s lending ask, and banks will want to see a comprehensive plan for the creation, operation and success of the business. An industry analysis is needed to determine if a prospective company is in tune with the needs of the area, and if there is enough market share available to be profitable. 

The business plan should also include a market analysis of the prospective customers and their spending habits. Also, who are the competitors in the market and what is your businesses point of difference that will enable you to be competitive? 

2. Honest financial projections 

Realistic financial projections are a necessary point that banks will review intently. Your financial projections should not be inflated beyond industry averages. Bankers will easily recognize this “stretching” of the financials, and would rather see that you are realistic about the time and commitment needed to grow a business. A good place to start is to assess industry standards and see how your company would compare to the current performance of businesses already in operation. In addition to profit and loss projections, banks will want to see a plan for anticipated cash flow, as timing and delays play a big role in managing the finances of an organization. 
 
Financial institutions may also prefer that you list a secondary source of repayment in the event that your business does struggle financially. Banks have to protect their assets with every loan, so proof of savings, collateral, or a strong guarantor will strengthen your request for funds. 

3. Stakeholders and business resources 

When a plan is under review, proof that the entrepreneur has stakeholders who know the business, and resources to guide them, is extremely beneficial. Providing a lender profiles of the business partners, investors, and management team to ensure that the business is in the hands of people with a history of successful experience can also be an advantage. Listing resources such as the Arkansas Small Business and Technology Development Center at UALR also demonstrates to lenders that you have done research and know where to turn for guidance as you grow your business. 

Entrepreneurs should know their industry, create a detailed plan for reaching their targets, outline the financial plan for success and have a team of players ready to work to make it all happen. Banks and lenders want to see their small business clients thrive, and will work with them to make sure the outcomes are successful for everyone. 

Links marked with * go to a third-party site not operated or endorsed by Arvest Bank, an FDIC-insured institution

Tags: Arvest Biz, Business Banking
 

Arvest Equipment Finance Enjoys Continued Growth

Friday, March 10 at 06:30 AM
Category: Business Banking

Volume increases more than 25 percent for second consecutive year.

 Arvest Equipment Finance (AEF) recorded a second consecutive year of at least 25 percent growth in volume, the division of Arvest Bank announced today.

After seeing a jump of more than 27.9 percent in loans and leases from 2014 to 2015, AEF ended 2016 with $234.7 million in loans and leases. That’s a year-over-year increase of 25.1 percent. Additionally, AEF increased its number of contracts from 1,046 in 2015 to 1,816 in 2016.

“Our growth was a combination of increased volume from the commercial lenders and from our vendor production, which is an area we are focusing on for future growth,” said AEF president Eric Bunnell. “Our experienced operations team did a fantastic job of meeting the demands for the increased volume, while the sales team was able to increase their joint calls with lenders and vendors, which led to new opportunities.”

AEF also announced a round of new hires and a promotion. John Bradford has been promoted to sales manager, while Omar Portillo was hired as manager of credit administration and Rick Dierks as equipment finance specialist for Missouri and Kansas. AEF is headquartered in Fort Smith, Ark., with locations in Little Rock, Kansas City and Tulsa, and does business throughout Arvest’s four-state footprint.

It also was announced that Matt Crawley and John Raymond Pitre have earned the Certified Lease & Finance Professional (CLFP) designation. The CLFP designation identifies an individual as a knowledgeable professional to employers, clients, customers and peers in the equipment finance industry.

Arvest employs nine of the more than 400 CLFPs in the United States and Canada. That total ties Arvest for the sixth-highest number of CLFPs among all companies.

Tags: Arvest Biz, Business Banking, Equipment Finance, Press Release
 

What a Bank Needs to See in Your Start-up Business Plan

Wednesday, March 08 at 02:05 PM
Category: Business Banking

The post-recession downward trend in new business activity is showing signs of reversal according to the 2015 Kauffman Index of Entrepreneurs*. In fact, last year the new business sector demonstrated the largest year-over-year increase in two decades.  
As entrepreneurs prepare to enter the marketplace, they must first distinguish what potential lenders will see as a “green light” versus a “red flag” in their start-up business plan. 

Financial institutions rely on business plans not only to make decisions on lending, but to determine the best mix of banking products and services that will most appropriately benefit their business customers.

Having a business plan is critical for both the business owner and the financial institution. Not only does a business plan provide a road map for research, it drastically increases the chance for success, including consistent growth and investment. For startup companies, a business plan allows entrepreneurs to create a blueprint that includes creation, operation, promotion and success of the company in specific details.  

Lenders first review a prospective company’s industry analysis to determine if the mission aligns with the needs of the area and whether there is enough available market share to be profitable. Within the plan, they also look for additional details outside of the financials. A business plan that extensively states the vision, strategy and future of the company is more likely to sell a lender on the idea, garnering them loan approval.  

Entrepreneurs should also undertake comprehensive market analysis that includes demographics of prospective customers and their spending habits, as well as key competitors in the same space. Equally important is to clearly explain the point of difference the planned company offers in comparison to its competitors and how that distinction will influence purchases.

Realistic financial projections are a critical point that banks will review. Do they compare with industry standards and are they in line with the current performance of similar businesses already in operation? One of the biggest mistakes entrepreneurs make in preparing their business plan is to inflate financials beyond industry averages. Bankers recognize this stretch and, more often than not, will see it as an area of concern and will reject the loan application. 

In addition to profit and loss projections, lenders review anticipated cash flow for the next year. Business owners typically think about costs and expenses compared to sales, but timing and delays play a big role in managing cash. Since profitability can’t guarantee cash flow, loan officers also look closely at accounts receivable and inventory turnover ratios which are other indicators of good business flow. 

The Arkansas Small Business and Technology Development Center* (ASBTDC) at the University of Arkansas at Little Rock is a comprehensive and valuable resource for business owners in the creation, management and operation of a company. The ASBTDC provides free services to business owners at any stage of development or operation of their business, including market research and consulting that strengthen any business plan. As a business grows the ASBTDC also offers a wide-range of educational and training opportunities. 

Proof that stakeholders know their business or have a record of success helps a plan stand out when it is under review. Applicants should include extensive profiles of the business partners, management team, investors and any other key players involved in the business endeavor. Collaboration or partnerships with individuals who have a history of business acumen bodes well for budding and seasoned entrepreneurs alike.

Financial institutions prefer proof of a secondary source of repayment in the event a business struggles. Those sources include savings, a strong guarantor, collateral, liquidity, etc. Banks must protect depositors with every loan, so proof of alternate sources for repayment is critical for loan applicants.   

A banker’s best advice for prospective business owners is to “Do your homework." Simply put – know the industry, create a point of difference, outline a solid and realistic balance sheet and assemble a reputable and experienced team. Lenders want to help small businesses succeed and the legwork done in the planning stages can be a strong indicator of the success that may follow. 

For more information on small business planning and lending visit the Arvest Business Resource Center at www.arvestbiz.com

Links marked with * go to a third-party site not operated or endorsed by Arvest Bank, an FDIC-insured institution. 

Tags: Arvest Biz, Business Banking

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