What to do when suppliers, markets & bankers simply vanish?
It is not unusual for business owners to become frustrated when facing challenges such as launch, recovery, or growth. The ‘how-to-get-there-from-here’ process can be daunting. So, too, is the task of starting over when an economic downturn has caused customers and suppliers to disappear. With sales volume and margins diminished, traditional management methods are often inadequate. But when trapped in this manner, what is the answer? Having been confronted with these scenarios several times over the decades, each time rebuilding what was, I found that an entrepreneurial pursuit of opportunity provided the answers.
Then, there’s the ‘friendly banker’ issue. When central banks changed their rules in response to the 2007-09 subprime lending crisis, difficulties emerged because the former, ‘friendlier’ bank models were no longer a fit. At one time, a more or less established enterprise could count on their local Bank branch manager to provide financial help. Finding such support today would be unlikely. Therefore, small to midsize businesses (SMEs) are often referred to as the ‘missing middle’ * meaning the enterprise is too large to qualify for a “micro-loan” (e.g., backed by a business owner’s home equity line) and too small for a conventional bank loan.
The way I understand it, the Bank for International Settlements (Basel, Switzerland) is a financial institution that serves all member-nation central banks. This houses The Basel Committee on Banking Supervision, which responded to the subprime financial fiasco by organizing an ‘accord’ named Basel III – coming up with recom-mendations to avoid another global catastrophe. As a result, bank policies were universally changed, redefining rules governing locally placed commercial loans.
Although some changes had already occurred after the previous financial downturn (1981), chances of finding a ‘friendly banker’ moved from rare to non-existent. Where viability-based lending was once quite common, today, it no longer exists within the realm of conventional banking.
Today’s bankers focus on a loan prospect’s asset coverage capabilities and their business’s historical financials. Unfortunately, providing five years of sound financial background becomes problematic when the markets that first created them have simply vanished. Conversely, a new launch will not have any history with which to secure a bank loan.
This brings about a shift towards equity capital. Unfortunately, be it ‘angel’ funds or venture capital, forecasted returns must be much higher than the average SME can generate. Typically, mediocre growth prospects or the lack of liquidity will discourage even the most patient investor.
Focused on ‘viability-driven’ growth initiatives – a strategic must when seeking private financial support – Entrepreneurialize Opportunity Corp. – is organized to create, structure and execute various generally straightforward but consistently effective 'entrepreneurial' solutions.
With this in mind, please introduce yourself! Go to "Let's Talk!" under MORE, found on the top NAVIGATION BAR, or click https://www.entrepreneurialize.com/ and scroll down to where you will find the Message Form.
*A term accredited to Céline Kaufmann of the OECD Development Centre (The Organization for Economic Co-operation & Development), Paris.
** Source: https://www.investopedia.com/terms/b/baselcommittee.asp
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