Managing Big Decisions

By Ben Loesel
Assistant Vice President, Business Banking

Most successful business owners I’ve met and worked with eventually reach a tipping point when growth requires additional capital—and they need to make some big decisions. Decisions such as: Will they buy or lease new equipment? Expand an existing facility or purchase a new one? Add to their current product line or enter an entirely different line of business?

If you’re contemplating choices such as these, your banker can help you make timely, well-informed decisions to drive your future success.

Take Houck Machine, for example. A metal machining company started in 1984 with a single piece of equipment, the company is now one of the nation’s foremost machining companies, serving clients from coast to coast.

Originally, Houck leased its facility. But as business grew (tipping point #1), so did its need for more space. That’s when owner Dick Houck came to me for a loan to buy a building. Then, a few years later, increasingly feeling the risk of relying on one large customer (tipping point #2), the company developed a plan to diversify. Based on the strength of Dick’s business plan—and the financial projections it included—I helped Houck secure another loan, this time to purchase new equipment.

When you speak to your banker about these big decisions, you should expect this same kind of help. Your banker should ask open-ended questions such as:

  1. If a machine breaks down, how will you fill orders?
  2. If you get several big orders at once, how will you pay for your raw materials?

  3. If one of your largest customers stops buying from you, how will you make payroll?
  4. If the unemployment rate drops further, how will you find qualified employees to run your equipment?
  5. If you buy a new piece of equipment, how will you make up the revenue lost when you have to close down for two weeks to install the equipment?

In the process of counseling you with respect to these and other questions, your banker can help you develop a more realistic view of your current business and where it could be in the months and years to come.

One way is by helping you develop realistic projections and using those projections to run three important scenarios: best case, base case, and worst case, especially with regard to sales, profits, and cash.

But if you’re like many of my clients, just the thought of developing these projections and scenarios can be overwhelming. That’s where spreadsheets come in. While they can be as simple or complicated as you like, you don’t need to start from scratch. You can search online for one that meets your needs.

Or, better yet, reach out to me at 651.714.6431 or bloesel@nabankco.com. I have an easy-to-use financial projection template that I’d be happy to share.

Business banker Ben Loesel has a Bachelor of Business Administration degree in finance with an emphasis on financial planning from the University of Wisconsin-Whitewater and a Bachelor of Science degree in accounting from the University of Minnesota. He lives with his family in Hudson.