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| Just In... |
As political advertisements clog the airways and candidates debate, it can be difficult to discern fact from fiction. Hennessey Capital is a proud supporter of the Citizens Research Council, an organization committed to providing non-partisan, unbiased independent information on significant issues concerning state and local government organization and finance. CRC believes that the use of this information by policymakers will lead to sound, rational public policy. We hope you find the Citizens Research Council to be a helpful tool in evaluating the issues that impact you personally and professionally. |
| It's a Done Deal |
Hennessey Capital announces the following recent done deals:
$750,000 A/R and Inventory line of credit for a Michigan-based precision tool manufacturer to restructure their current line of credit and provide additional availability.
$500,000 A/R line of credit for a Michigan-based engineering and IT consulting firm to replace their current lender and address working capital needs in response to new marketplace opportunities.
$50,000 factoring facility for a Michigan-based precision machine company to fund additional sales.
$50,000 factoring facility for a Michigan-based company providing consulting to clients looking to maximize energy efficiency and conservation. Financing was used to support working capital needs.
$50,000 factoring facility for a Michigan-based manufacturer and distributor of metal, wood and plastic component parts for customers in the defense and manufacturing sectors.
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| Greetings! | Welcome to the October 2010 edition of Growth Capital News. This edition focuses on the evergreen topic of sales and marketing. We hope this month's information and insights help keep your sales pipeline full and your marketing effective - and provide some new and creative ideas on how to do both.
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| Tips on Working Capital Management |
 By Toby Dahm, Senior Vice President, Hennessey Capital As a frequent blood donor, I am often reminded of how critical blood is in sustaining life. This is something that we all know very well, but don't give much thought to unless we, or a loved one, are in need of a transfusion. In the business world, cash is the lifeblood that flows through the veins and arteries of a company. Historically, many businesses did not pay much attention to their cash flow. With the economy slowed and the credit markets tightened however, most companies have become highly sensitive to the need to manage their lifeblood, cash, very closely. One of the areas in which businesses bleed cash is in working capital. While historical financial wisdom considers a strong working capital position to be an asset, it is an elusive drain on cash. In very simple terms, working capital is the amount of funds that a company invests in accounts receivable and inventory, minus the amount it has borrowed from suppliers. The greater imbalance between the financing (terms) provided by suppliers and the time it takes to generate and collect on the sales of a product or service, the greater the investment in working capital and, thus, pressure on cash. As companies grow, working capital absorbs cash at an increasing rate, which means that as we enter a period of recovery, working capital pressure will increase. So, what can a company that finds itself in this working capital trap do to minimize this cash crunch? Here are 5 suggestions:
- Develop and implement a real cash flow plan. All good sports teams devote themselves to developing and executing a game plan. They also monitor the dynamics of the game and make constant adjustments based upon how the game unfolds. The same planning, execution, and adjustment must be done in the area of cash management. The model does not need to be overly complicated, but must be based upon the true cash flow of the business, not the profitability of the business. It should be broken down on a weekly basis and a good time frame is to look forward 8 to 12 weeks. The model should be updated weekly, or as circumstances warrant a change, just as a sports team will call a timeout and make a change at a critical juncture in a game.
- Negotiate and enforce favorable payment terms with customers. Companies make two major mistakes in this area. The first is by not asking for favorable payment terms, and the second is in not enforcing the payment terms. Customers are often willing to accelerate payments to their suppliers. They may require a discount, however, because a strong customer often has a lower cost of money than the supplier. The discount may be quite advantageous, especially if cash flow is tight. The second area is purely business management. Many companies believe that once they negotiate terms, payments will be automatically made accordingly and they fail to follow up (manage) their accounts receivable. There are a variety of reasons that invoices may go unpaid, ranging from missing documentation to customer cash flow problems. It is incumbent on all companies to follow up on the status of their invoices before they become due to insure they will be paid on time. Customers often have online status systems that will provide this information in real time and with no personal contact being required.
- Manage inventory effectively. Again, there are two main areas of focus here, tracking and managing. Companies with significant inventory must have a system of identifying the inventory on hand, properly valuing that inventory, and measuring the movement (turnover) of different inventory items. Once the tracking system is in place it should be tested through periodic physical counts to confirm its accuracy. This data, however, is only valuable if it is managed. By reviewing inventory turnover, and working on ways to move slower turning items, and adjusting purchasing accordingly, a company can improve its turnover of inventory which generates a positive cash flow.
- Negotiate manageable payment terms with vendors. As with customers, vendors may be willing to extend terms that are more favorable than their standard terms. This usually requires that you establish a good payment history with them, so it is a tool that you can use to improve cash flow over time, as your track record grows with your suppliers.
- Obtain sufficient outside financing. Most businesses find that there is a gap in their working capital position that must be bridged. There are a range of ways to bridge the gap for small to medium sized companies, ranging from a bank line of credit to factoring and purchase order financing. While it is beyond the scope of this article to go into each of the options, having a working cash flow plan (see suggestion #1) is critical to determine the appropriate level of working capital financing for the business. As we slowly emerge from the second worst financial crisis in our history and the ensuing recession, the pressure on cash flow to sustain the lives of our businesses is stronger than it has ever been. This means that close working capital management is a must for all companies. It can be the transfusion that sustains the life of your business.
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| Conan O'Brien: King of Social Media |
 When Conan O'Brien hits stage this November, he won't be string-dancing to an empty audience. Since leaving NBC, the funnyman has amassed an army of followers under the banner of Team Coco, a band of loyal fans that has grown thanks to O'Brien's innovative use of social media. Using almost every online tool available, from Facebook to Twitter, YouTube to Foursquare, the late night host shows that social media is a force to be reckoned with. Case in point: Conan has more than 1.7 million followers on Twitter. His arch nemesis Jay Leno? A paltry 89,689.
FastCompany demonstrates how Conan has dominated in the digital age.
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| Sales Calls That Work | |
A colleague asked an interesting question recently... one that resonated with me personally as it pointed to an area of my business that once did NOT work and now DOES work.
He asked, "When making sales calls, are the questions we're asking offering up the right answers?" Much depends on how we each define "right answers", but who really has those anyway?
As a technical expert, it's likely your professional training didn't prepare you for the world of sales. That's a challenge if you own your own a business or have been promoted to a business development role in your organization.
Many technology professionals (and even die-hard salespeople) will say that cold-calling or sales calls don't work in their business or industry.
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| Marketing on Facebook: 10 Do's and Don'ts |
 Facebook may have 500 million users, but having an outpost on the social-media site won't necessarily increase sales or referrals to your website. But the right tools, used strategically, can help make Facebook an important part of your marketing, lead acquisition and customer-service strategies. Do's and don'ts |
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Marketing The Brand
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Today, many businesses refer to their identity as "their brand." Although a company's identity is in essence the companies brand, the word "brand" or "branding" gets misunderstood and under developed. It is not enough to have a logo created and a style guide made and call that your brand. The identity of a company is their logo, website and any other marketing materials that get used to either sell a product or define a presence in an ad or publication, but it is only part of the branding process.
I advise my clients that branding is a three-step process. It starts with brand discovery and research, followed by development of messaging and lastly, marketing material design. Once a company has gone through this process they then have to educate the staff of this "brand identity" so that the messaging not only is executed through the actual creative work but is supported and understood by the brand's most important ambassadors - its staff.
Becoming a manager of the brand is ongoing work. Once you have invested time and efforts into the brand strategy it is time to manage it and own the brand. Your customer's ideas of your brand are formed from his or her experience with it. Every customer interaction with your brand is a chance for you to make your mark and expand recognition in the marketplace. It is crucial that you represent and market your brand in a manner that specifically reflects how you want your customers to view it and with a message they can understand and retain.
With a new brand strategy in place, a business can begin integrating it into all of your marketing and communications materials. It is time to track and monitor the effectiveness and efficiency of your strategy and creative materials. You will now be in position to be remembered for the product or service your offer. Managing and marketing your brand will be a continuous effort and will evolve as your company grows. From traditional marketing and creative design through social media platforms, the brand lives.
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| Hilfiger: An American Brand | |
 Tommy Jacob Hilfiger stitched his initials into the American fabric with confident strokes and colored thread by following a determined mantra: Never give up.
That credo is especially important in fashion design-part of American pop culture's roller-coaster ride, as Hilfiger calls it. The second of nine children born to working-class parents, Hilfiger jumped aboard the ride at a young age. In the interim, he has ridden from the bankruptcy of his nascent effort to the upper echelons of the industry, down a steep turn or two, and back to the top as his red, white and blue brand celebrates its 25th anniversary this year. Read more of the Success Magazine profile
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| Selling Effectively - Traditional Sales Techniques vs. Social Media | |
Traditional sales strategies are still an effective way for brand communication, awareness, and eventually making the sale. Telemarketing, direct mail, e-mail marketing (to me that's similar to direct mail), networking, exhibits, and face-to-face and group meetings all work well.
Social media was added to the mix awhile ago and is a primary targeting and marketing source and also an "enhancement to all of these traditional marketing media." Social media is similar to face-to-face networking only with "written" words and pictures. The conversations are shorter, more interactive, and at a different rhythm than we are normally used to. After awhile, the conversations can get intense and frequent. Social media is also similar to a "networking session," in that you can find people who match your mindset, who might turn out to be good friends and have good business potential both now and in the future. They themselves might be a business lead or may end up being a quality referral source. Read more |
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Do you or a client have a business growth opportunity? Do you require additional working capital? The Hennessey Capital team can help. Visit HennesseyCap.com or contact Toby Dahm, Jeff Wright or Joe Romeo at 248.658.1100 to learn how Hennessey can help you or your clients. |
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