Tuesday, February 13, 2007

Rule Number 2 in Action

There's never a shortage of stories about a business which lands a big contract and then gets hit by a cash flow squeeze.

Hispanic Business adds another story to the list in The Doors Open Wider. Precision Task Group Chief Executive and President Massey Villarreal has learned over the course of 27 years in business that when a small business wins a big contract, it is "like swallowing a watermelon because if you don't have the financing, you can't get it."

So this is where Rule #2 comes into play - raise money before you need it because you’ll always need it sooner than you think.

In Villarreal's case, he's raised money before his business needed a loan by developing a long term relationship with a bank that was willing to finance his growth. As many of you know, becoming "bankworthy" doesn't happen overnight.

But even if you're not bankworthy, there are other options to obtain a business loan if you have assets to offer as collateral. Purchase order financing, accounts receivable financing, equipment leasing and minority business loans are some of the options that might enable your firm to digest that big contract. It doesn't always matter if you don't have a long enough track record or a pristine credit profile.

So focus on rule #2 and start looking for appropriate sources of financing before your cash flow gets squeezed!

Need help finding the right lender in anticipation of landing the big contract? Read "Matchmaking for Business Loans" and give me a call.

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