Global currency markets have been experiencing larger than normal swings of late and with greater frequency, CFOs are citing foreign exchange volatility as a factor when companies miss their earnings targets. Increasingly, business leaders are looking to implement hedging programs to mitigate foreign exchange rate risk and create more certainty and stability within their organizations.
The complexity of transitioning to an Employee Stock Ownership Plan (ESOP) can be intimidating, says Elisabeth C. Schutz, senior vice president and director for the ESOP Group at Bridge Bank.
“Many attorneys and CPAs don’t want to spend the time and energy it takes to learn about them,” Schutz says. “That’s one reason why you don’t see more ESOP companies in the U.S. today.”
Before a bank can help you identify products and services that can make your business run more efficiently, you need to have an idea of the gaps that are holding you back, says Abigail Avalos, vice president of Treasury Management Services at Bridge Bank.
“What’s important to you?” Avalos asks. “Companies have so many things that they are managing and so many different priorities. Before you meet with your bank, you need to sit down and think about treasury management services and which options would most effectively help your business.”
Business leaders struggling to decide between raising debt vs. equity as the best path to growing their business need to stop and think about what they will do with the money once they get it — and what the actual need is. Is it a true working capital need?
Or something else?
Your hard-earned capital will almost always be spent in one of two buckets — working capital and everything else. Depending on your business model, however, you may find that your needs require a mix of both.
Clarity can go a long way toward convincing an investor to buy a stake in your business. If you believe your company is headed in the right direction and you have evidence that clearly backs up this notion for potential investors, you could be on your way to making a connection that will help you achieve your goals.
If you can’t provide that evidence in a quick, concise manner, you’ve got a problem.
Recurring revenue lending is an alternative form of senior debt financing that is particularly useful to growing companies dealing with the steep cost of customer acquisition.
“Companies can leverage a recurring revenue stream with debt which may lessen the amount of venture capital needed,” says Mark Breneman, senior vice president and business line manager at Bridge Bank. “By using this asset, they can lower dilution, gain liquidity and achieve positive cash flow more quickly.”
A growing number of businesses have at least some, if not significant, association with overseas markets and, by extension, exposure to foreign exchange risk.
They may have customers internationally who seek to buy their products using local currency, suppliers located overseas invoicing in their own currency, satellite offices situated in foreign markets requiring local currency transactions or, in many cases, all of the above.
An Employee Stock Ownership Plan (ESOP) can be an effective way to create liquidity as well as serve as a means to transition your business to new ownership while providing an ownership benefit to employees.
The issue with other options such as selling to a strategic buyer or private equity firm, or even conducting an initial public offering, is that each option typically forces you to sell 100 percent of your stake in the business.
Self-confidence is a valuable trait for any CEO, but it should be blended with a willingness to accept help when it’s needed.
“You may have some trouble recognizing operational issues or early signs of operating challenges,” says Jorge Visitacion, senior vice president and team leader of the Capital Finance Division at Bridge Bank. “You may not want to admit there is a problem, but you need to recognize the early signs of a company that is in distress. If you don’t, the problem is only going to get worse.”
The growth of U.S. exports is a trend that should continue along with a strengthening global economy, says a report from the Department of Commerce.
Plenty of programs are in place to help companies do even more exporting, says Ralph Barnett, executive vice president and manager of the Real Estate Lending Division at Bridge Bank.
“There is a lot being done at the local level to encourage activity,” Barnett says. “Is there still a level of bureaucracy that has to be learned? Absolutely. But I think there is an ongoing effort to make it easier.”