BusinessConnection

Exclusively for Tri Counties Bank Corporate and Business Clients

VOL. 16, ISSUE 3

Service With Solutions™

Business owners frequently encounter difficulties managing their cash flow as a result of seasonal credit demands and time gaps between capital needs

and revenue receipt. This is especially true of business start-ups during their early stages of development and businesses with cyclical expense and income periods, like agriculture and tourism. Once crops are planted or inventory has been purchased, it is necessary to ride out the cycle until accounts receivable have been collected.

Without sufficient working capital, a serious cash flow problem could develop. These types of cash flow problems have forced many business owners to close down businesses that were making money on paper but just ran out of cash. Below are tips for working to establish the type of credit that could best suit your business needs.

Establishing a line of credit is best discussed at the beginning of your

Smart Tips for Establishing a Business Line of Credit

banking relationship. A line of credit accommodates the seasonal credit demands of your business along with ups and downs in your cash flow. It also enables you to purchase inventory in anticipation of future sales. Getting the line approved depends on your business’s ability to repay.

You need to present reasonable financial documents that follow

standard accounting practices to obtain a line of credit. The bank will need to know how you will repay the line when your first source of repayment does not come through. Bankers look for enough elasticity in your operations to accommodate temporary reversals in adverse situations. What happens when you discover that your inventory is not selling as projected? What secondary sources of repayment are available?

If your business is relatively new and the bank is not satisfied with the primary

and secondary sources of repayment, it may ask for personal collateral to secure the loan. The owner may be required to sign a personal

guarantee of repayment securing assets of the owners — for example, a second mortgage on a home, assignment of stocks and bonds, or assignment of the cash value of life insurance policies.

If the venture is a partnership or corporation with more than one

principal, the bank will most likely collateralize the loan from all the principals involved to obtain a line of credit. The bank may require you to pay down your line of credit during the initial term, even though the total amount of money that you borrowed is not due for several more months. Business loans are typically used for capital expenses. Whereas, lines of credit are intended for cyclical borrowing needs at identified pay-down intervals.

Your Tri Counties Bank Business Banker can help you determine if a line of credit is the right tool for your business, and advise you on other solutions Tri Counties Bank offers to ensure your business’ success.

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24-hour banking (800) 922-8742 TriCountiesBank.com

Prepare Your Business for These 4 Common Crises

Business Connection Vol. 16, Issue 3

Most small business owners don’t have a disaster plan in place. If you’re among them, consider this reality: in many cases, a crisis such as a natural disaster or cyberattack can stop a business in its tracks. According to the Insurance Information Institute, around 40 percent of small businesses

close their doors permanently after experiencing an emergency. Give your business better options by preparing for these four common crises that small businesses encounter.

1 Natural disasters. Although you can’t prevent a storm or flood from causing damage or halting business, you can set a plan for everyone in the company. Start by organizing emergency

contact information for you and your employees. Protect your business’s functionality too. Be sure all your data is backed up on an off-site server — either one you own or through a third party. Review your insurance coverage to be sure it’s adequate.

2 Client pitfalls. Keeping your company from being too dependent on a single client will protect your business in the event of their work shrinking or drying up completely.

You can diversify your client base and count on more consistent work by taking on more small clients with whom you can grow your relationship. This can help keep your business from being caught off guard if one client decides to go a different direction.

3 PR problems. These can start small and snowball out of control, such as a customer who feels he or she was wronged by your business and decides to go to the media about it.

Address the problem head on, and if it is a PR problem that cannot be managed internally, consider temporarily hiring a PR consultant. By shopping around with PR firms before a crisis happens, you can get an idea of the cost to handle bad press or negative public attention. You’ll also be able to find the right consultant who can partner with your business to help guide you through the turbulent times.

4 Cyberattacks. According to the cybersecurity company Symantec, 3 out of every 5 cyberattacks in 2014 were on small businesses. Simple solutions like changing your passwords

to more randomized combinations make your business significantly more difficult to hack. Or you can enlist the help of online companies that manage your passwords and security for you. You might want to look into cyber liability insurance, too.

Staying ahead of a crisis takes regular management. Using resources like Online and Mobile Banking from Tri Counties Bank helps you stay connected to your finances. You’ll be able to track transactions or remotely control your account when you can’t reach the office. That way you’ll be able to stay one step ahead of a crisis and keep your business moving.

Simple solutions like changing

your passwords to more randomized

combinations make your business significantly more difficult to hack.

Have you checked your business’s credit report recently? If so, congratulations! You are among the minority (1 out of 3) of business owners who have checked their business credit report in the past two years, according to a recent survey by The Wall Street Journal and Vistage International. Are you even aware that your business has a credit report? Many small business owners are not.

Your Business Credit Rating

What You Don’t Know Can Hurt You!

(800) 922-8742 TriCountiesBank.com

You should regularly review your credit profile. If you find errors, report them immediately.

SO WHAT?You may think that your company’s credit report is only important if you’re applying for a loan or line of credit through a financial institution. But although that is certainly an important use of business credit reports, it’s not the only one. Many small businesses rely heavily on trade credit to help them manage their cash flow. And suppliers who grant trade credit may check your credit report before deciding the length of the payment period they offer you — or even whether to grant credit at all.

WHAT TO DOYou should regularly review your credit profile. Look at the data collected by reporting agencies to check for accuracy and to identify gaps in the data. If you find errors, report them immediately and follow up to be sure mistakes are corrected and holes filled in. Some business credit bureaus gather information from creditors only; others include data supplied by the company itself. A few independently verify the facts.

Major business credit bureaus

Dun & Bradstreet (www.dnb.com) Equifax Business (www.equifax.com/business) Experian Business (www.experian.com/business) Credit.net (www.credit.net)

Tri Counties Bank’s business bankers are always ready to help you as you prepare to apply for a business loan. Make an appointment with a relationship banker today. Visit www.TriCountiesBank.com or call 1-800-982-2660.

Credit agencies such as Dun & Bradstreet, Experian and Equifax often start developing a company’s credit report using public records and other available financial data without the company’s knowledge. Unfortunately, the reports do not always contain complete or entirely accurate information. Of the companies responding to The Wall Street Journal/Vistage survey who had checked their credit reports within the past two years, a quarter said they found errors or missing financial information that put their business in a riskier category.

This publication does not constitute legal, accounting or other professional advice. Although it is intended to be accurate, neither the publisher nor any other party assumes liability for loss or damage due to reliance on this material. Websites not belonging to this organization are provided for information only. No endorsement is implied. Images may be from one or more of these sources: ©iStock, ©Fotolia. ©2016 Bluespire Marketing | bluespiremarketing.com

If you’re operating a small or mid-size business, developing a corporate giving program may seem like an expense you can’t afford. But paying it forward pays back — in addition to the many intangible benefits of giving your time, money or

resources, you’ll find several business benefits beyond potential tax deductions. Here are four benefits of integrating charitable giving into your organization’s growth strategy:

New customer acquisition. Not only does giving back help your community, you might gain new (and loyal) customers, too. In a recent study, 40 percent of millennials said a brand’s social responsibility is important to them when choosing where to shop.*

Increased employee engagement. Recruiting and retaining top-performing talent is a priority in all thriving organizations. Involving employees in charitable giving efforts can help boost productivity, provide a sense of pride and inspire loyalty. In an employee engagement survey, 74 percent of employees said their job is more fulfilling when it provides opportunities to impact social and environmental issues, and 70 percent would be more loyal to a company that helps them contribute to these causes.**

Enhanced service and operating area. Efforts to improve the community you serve help make it a better place to live and work for your employees, customers and prospective clientele. The key is supporting causes that relate to your business goals.

Networking opportunities. Working with nonprofits and local business leaders can help you create powerful partnerships and fruitful business relationships with like-minded contacts. Having a common goal also creates an easy way to maintain those new relationships.

* Source: Moosylvania.com, Millennials 2015: Favorite Brands Ranking Report.

** Source: Cone Communications, Employee Engagement Survey.

Benefits of Giving Back

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