All businesses need capital to operate. Many businesses don’t use their capital in an effective or efficient manner. When we work with a business owner on Capital Formation, we often find that either capital is used ineffeciently or the business doesn’t have adequate capital for the business owner’s growth plans.
When we work with business owners to help them understand their capital requirements, our first step is always to determine what the owner’s goals for his or her business are. Do you want to grow your business, or do you want to harvest the value that you’ve created? The answer to that question often leads to a path that supports your goals.
Whether you have a lifestyle business or a business that you want to grow and cash out for big dollars, there are strategies you should pursue to achieve a successful outcome. This outcome needs to make your life better. During our Capital Formation conversations we will always ask if the strategy and actions that you need to take would, in fact, make your life better.
Our goal when working with a Client on capital formation is to help you understand what strategies you want to pursue and then to help you develop sustainable strategies that fit in with your long-term goals.
Some activities that we pursue when working on Capital Formation are:
- Understanding what is your growth strategy
- Helping you understand what type of business you have from a capital needs point of view
- Helping you to develop a strategy for how much cash should stay in the business
- Helping you develop a strategy for when to borrow money, get outside equity, or fund capital needs with your own cash
- Having you understand why leaving cash in the business is often not a good thing
- Having you know what your options are for capital needs
- Helping you understand personal needs that come from different capital strategies