Category Archives: Banking

Check your finances before you make any expansion plans

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If you belong from the construction industry, you will experience many instances when you are unable to implement a plan due to shortage of finance. If you do not have sufficient money, it will be very hard for you to grow as a businessman. Many people who were not able to hold their businesses got drowned, few lucky ones made it but the one who has managed his finances well made it to the top. This industry offers a lot to those men who really deserves it and punishes those who are not organized and do not know to play wisely with their money.

Though the requirement of finance is all throughout the life of the business but you may feel its need more when you seek for an expansion. This is when you will see the need to turn up to people whom you feel can lend you money. As a matter of fact, it will be hard for you to find anyone who would be ready to lend you the much needed money. Financial institutions may want some collateral and most possibly you got to keep your business as a collateral with them.

Few important pointers that one must take into consideration before they finally decide to expand their construction business.

Expanding your business to a new city:-

When you think of setting up your business in a new city, you first need to be sure that you will be able to control it remotely. Since you will not be present always, you need to place someone who can manage things in your absence and keeps you in loop for the slightest of things. You also need to make sure if you will be able to cope up with the infrastructural costs involved to set up an office in a different city. There should not be a huge influx of funds from your existing business to your new business or it may result in a chaotic condition where you have to end up in churning either of your business.

Taking too many projects:-

Getting enough projects is always a good sign but taking too many projects that you find difficult to handle should be avoided. Alternatively, for every new project that you take, you have to allocate some funds to take care of the expenses. If you have too many projects in hand and not enough money to meet the expenses, it will lead to a disaster. You may eventually have to give away few projects after incurring good deal of loses. Other than that, it will also hit you hard on the relationship aspect that you hold with your clients. The losses will be manifolds. It will be prudent to inspect your finances before you commit on a project.

A sound financial strategy often helps:-

Running a successful business requires a lot of planning to be done. Understanding the needs of the project and comparing it with the resources you have in hand can help you prepare a better plan. A sound and down to earth strategy will often turn out to be helpful.

Keep a track on your finances while spearheading for any expansion plan

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When you think of expanding your business, it means that you are having sufficient money to let you think about it. It would be absolutely naïve for someone to even think about expanding his business without having enough money in hand. The other option would be to take loan from financial institution. However that will cost you interest that you will be required to pay for the next many years. Taking loan can’t be termed as a bad option. It is just that one should go for this option only when it is really needed. As long as they can do with the money they have in their account as surplus, they should try to take care of any expansion plan with that.

We will be discussing few very important points that one should take into consideration before they decide to spearhead for any business expansion.

Multiple projects should be avoided without adequate resources:-

When we talk about expanding our business, we have to pay a lot of heed to the fact of having enough resources to take care of the extra project. You can’t sign up with a company and commit them of completing their project if you do not know whether you have adequate resources in hand. One of the major components that come under the word “Resources” is availability of finance to fund the project. You just do not want to start up with something and then get to know that you are unable to carry it along due to scarcity of funds. That will be a nightmare both for you and the one who gave you the business. That will also go against your goodwill and will deteriorate your relation with your client. You definitely do not want that to happen with you.

Knowing your finances helps you to take better decisions:-

You can take better decisions when you know how much money you have that you can utilize for your business. Remember, you also got to meet your financial responsibilities with your existing company like paying salary to your employees, taking care of operating and non-operating expenses and many other expenses that probably your accountant may keep an account of. It is better that you call up a meeting and take detailed report from all the departments. Understand the immediate financial requirement of any department and once you have taken suggestions from every corner, you decide what should be your next step.

Turn up to a financial institution if you really have to expand:-

At times you may get an offer than would be too lucrative and naturally very hard to resist. You will certainly not want someone else to bag it instead of you. In situations like these, you may turn up to a financial institution to avail loan from them. However, before you do so, have a small talk with your business advisors and check what they feel about the project. In case, if they all are positive about it, you may take a shot.

Don’t blindly trust any financial institution to take a loan on heavy equipment

Getting loans has become so simple that for any reason, financial institutions are ready to offer you loans. Be it buying a house or a car or for that matter buying furniture for your home, all you have to do is approach a financial institution and show them your good credit rating. They would be more than happy to offer you loans. If you need a higher amount, then they may also ask for your income and expense statements and other relevant documents that show the amount you earn in a month. On that basis, they evaluate and offer loan to you. This all sounds good when you have a descent income every month and a stable job with job security. However, things turn sour when it comes to individuals who want to start a business and are in search of institutions who can lend them money. Things go awry when the loan is for purchasing heavy equipment. Heavy equipment are expensive items and most banks do not want to finance it wholly. They would want the person to invest a portion of his money and the rest can be arranged by way of loan. That is also a valid point but for guys who are experience a severe financial crunch, they may find it hard to pay the initial portion.

For such individuals, there are institutions who will offer them easy financing but at an exorbitant rate. You may get tempted to take money from them and you may not read their terms and conditions and will sign on the dotted line but that will be just the beginning of your misery. You will be required to pay a very high rate of interest and probably very high service charge as well. It is prudent to first understand why they are offering you a loan when other recognized banks are not. They may have certain conditions that may not be favorable to you.

In order to stay away from such financial loan offering companies, you first recognize them. The first question you should be asking is why they are ready to give you loan when other companies have clearly defined their conditions. What happens if you are unable to pay the loan in a timely manner? Do they have the authority to take away the heavy equipment? On what terms are they offering the loan to you? These are few questions for which you need to find an answer. Check their websites and see if there is something that they are trying to hide from you. Look for complaints and grievances from other customers. You can also set up a forum where you can ask people about their views on such institutions. You will get plenty of answers on which you can make a sound decision.