Growing Your Business Through Finance

Growth is important to all business owners, and managing cash flow correctly is key to any growth plan. Contractors must have proper cash flow management and available capital to reinvest into the business and minimize downtime in the field. Here’s something to think about: As a business owner, you pay your employees as they produce results, so why should a piece of equipment be treated any differently? Anything that produces revenue for the business should be paid for as it produces, so financing is an important part of solid cash flow management.

For a contractor, time is money and efficiency is key. Financing equipment purchases allows you to afford more equipment, equating to more equipment on the jobsite generating more revenue. 

Many contractors face unique challenges in their day-to-day business operations. Contractors need to pay up-front for materials, labor and equipment, which can be very costly. However, it is often takes months before you receive any income from the project. Financing helps bridge the gap by providing funds to lower up-front cash payments until payments start rolling in from your customers.

We know that proper cash management grants you the ability to meet monthly obligations without depleting your cash reserves. It is important to focus on the return on investment and match a monthly payment to the revenue the equipment generates. When financing is utilized, you will witness a positive return on investment in one month, something that cannot be done with a cash purchase. As you think about the disciplines necessary to continually grow your business and reach your objectives, financing is a tool that can help you manage your cash flow and take your business to the next level.  

Financing improves your cash position and allows you to invest the additional cash back into your business to continue to grow. You can utilize that cash to invest in training your employees, adding employees, upgrading your software systems, marketing your business, and getting access to the latest technologies, just to name a few. Well-trained employees will create additional efficiencies in the field, the latest software programs will create accounting efficiencies and more accurate billing, the ability to market your business for new projects is key to continue to grow and having the proper equipment will allow you to be more efficient on the jobsite. 

Financing is not always meant for the businesses that cannot afford the equipment. Financing is widely used for those business owners who understand the importance of financing and maintaining strong financials. If you think about your balance sheet, a depreciating asset is best offset with a liability versus a liquid asset, such as cash.  

There are multiple ways a contractor can secure financing. Traditional lenders often view construction as a risky industry, which can make it challenging for contractors to secure loans. Whether you are looking to expand your equipment fleet, upgrade your tools or invest in new projects, financing offers a variety of options tailored to fit your company’s needs. Many times, flexible payment options can be tailored to support your business objectives, giving you additional options for growth and stability within your business. In-house financing terms can tie up your credit lines with your suppliers and prevent you from ordering equipment, parts, and accessories during critical times in your business. Financing will free up those lines, allowing you to order product for those emergency situations that arise at inopportune times, which will minimize downtime. 

In summary, financing is a tool to help you continue to grow all aspects of your business. The end goal is to help you grow your business effectively and efficiently. It is not a one-time transaction but an overall strategy.