Sustainable and long-term growth doesn’t happen by accident. It is the result of strong, strategic planning. It also requires capital. It’s essential that you consider your long-term financing needs and secure funding from a partner aligned with your goals.
When defining those goals, think about the level of funding you’ll need – both short term and long term. Run projections and anticipate how your business will change and what funds will be required.
Share those plans with your chosen financing partner. You want to establish and nurture a true partnership from the start so they are allies in your growth, not an obstacle to it.
Can You Bank On It?
As explained in the eBook, Where Can You Find Flexible Funding and Capital?: “Choosing a funding source that offers the right amount of cash flow, with low fees, and an easy application and funds transfer process is essential.
You have options; some offer great flexibility, others very little. Each one can be right for some staffing companies at some stages of growth, but few are right for every staffing company—and even fewer will stay right forever.”
When staffing business owners consider securing a line of credit from their bank, they quickly identify several common challenges:
- Banks are restrictive and selective since the recession; staffing firms aren’t always the most appealing type of business for funding
- Bank loans are based on credit history and historical performance; as your staffing firm grows and requires more capital, it’s not uncommon to quickly reach the cap of the credit line and/or be faced with exorbitant fees
- It can be difficult to determine the amount of funding you will need – if credit line is too small then as needs grow you must go through approval process again and pay additional fees; if too large then you’ll pay fees on what you don’t even use!
- Since banks often require that hard assets be pledged (e.g., property, vehicles, etc.), your house or business will be collateral on the line (and that is especially concerning when a client doesn’t pay)
- Traditional banks typically struggle with staffing industry experience and the ebbs and flows inherent in this type of business and economic cycle – and the correlated need for capital in times of growth
To be clear, banks can be the right choice for some firms at some stage, however, you must be vigilant and scrutinize the details of any agreement. Consider how the details impact your current situation, as well as how your lending may be restricted as you attain your growth objectives. Always consider rates and fees, as well as evaluate how lenders extend credit and how their rate is structured.
Download the eBook to learn more about the importance of being proactive in the process of evaluating and comparing options; reviewing agreements, commitments, and obligations; and researching funding sources thoroughly. The content explores the three most popular ways a staffing company might secure financing: a traditional bank, a factoring company, and an alternative funding source (e.g., end-to-end service provider).