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“ You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.” - Warren Buffett
Things Have Changed
A few years ago many small business owners were able to walk into a bank, have a conversation with their friendly banker, and make proper arrangements in order to access capital when needed.
I think we can safely say that the environment has changed quite a bit and the days described above are long gone.
The crash of worldwide capital markets in 2008 has impacted financial markets world wide, and changes have been made to protect the markets from being compromised and to keep markets liquid.
Most are very aware of the fact that credit markets were greatly impacted by the activities in 2008, and changes in the availability of credit and reductions in the ability of small business owners in particular to obtain credit have made obtaining credit and capital for most businesses more difficult and a much more intensive process.
In fact, most business owners don’t fully understand how the changes have impacted their ability to obtain capital and won’t realize this until they need capital, and from our perspective, waiting until you need capital to figure out how to obtain capital is probably not a wise decision.
There is no time like now to make sure you are prepared, so that when you need capital you can obtain it, and the best advice we can provide is to work with someone who understands the market.
The proper financial reports will provide the evidence and support you need to gain access to capital, and there are three areas that are critical in maintaining the proper financial information to generate reports:
Recording
There is an old adage that goes ‘garbage in - garbage out’. If you are not recording
your transactions correctly, or if you are using questionable input methods and questionable data, the
reports you generate will not be very useful.
Reporting
Reports are generated from the data that is entered, and the reports must be accurate and applicable.
If you are looking to gain access to capital to boost marketing, showing inventory reports probably won’t
be the most useful use of time.
Knowing Your Audience
Each set of investors or lenders will have different criteria, and you need to understand that so that you can satisfy their requirements. You probably won’t prepare a presentation in Spanish for a Chinese audience.
