Don’t Wait to Upgrade Your IT Systems – Leasing Provides a Tech-Friendly Solution

A November article in Crain’s Detroit discussed “How 3 firms said ‘bye’ to old tech, overhauled IT and rebooted their bottom lines” – by upgrading their current systems to better serve employees and their customers.

The article focused on how most small and medium-sized businesses need to invest in their IT infrastructure with significant technology upgrades to increase their systems’ performance and also provide cost savings to their companies.

With the fast-pace of technology, businesses may find themselves spending more money to repair older, less reliable IT hardware, software and servers instead of resolving issues with updated computer systems. The short-term fixes develop into the old adage of placing a finger to stop a leak in a dam.

Many forward-thinking businesses have turned to fixed monthly payments through an equipment lease as a tech-friendly solution to upgrade equipment now without the large, upfront cost. By leasing IT equipment, small and medium-sized businesses can budget the equipment, software and installation costs into one fixed monthly payment (or one invoice) during a selected term.

Equipment leasing provides flexibility. Your business chooses the equipment (even from different manufacturers), the length of the lease term (3 to 5 years), and the end of term buyout (Fair Market Value or $1 Buyout). The payment does not fluctuate during the term – it is locked in throughout the lease – plus many SMBs prefer to match the monthly lease payments with their firm’s revenue stream versus cutting a big check upfront.

When should you choose a FMV buyout vs. a $1 Buyout?
• Fair Market Value Buyout has a lower monthly payment than a $1 Buyout as this option gives the customer the option to return the equipment at lease end, upgrade to new equipment during the lease period, or purchase the equipment for the FMV at end of term. The FMV buyout is geared toward technology equipment with a short lifecycle such as IT hardware or software.
• $1 Buyout is focused on companies looking to acquire the equipment at lease end due to the longer lifecycle (5 to 20 years) such as office furniture and machine tooling. The customer pays more toward the residual value of the equipment with the goal to own at lease end.

Crestmark Equipment Finance has helped many local and nationwide businesses maintain updated technology through flexible hardware and software financing programs geared toward avoiding equipment obsolescence. When the lease matures, Crestmark Equipment Finance can remove the older equipment and upgrade to new equipment and software without a reduction in functionality due to outdated systems.

As a leasing customer, you also may add new equipment, software, installation or other services throughout the lease term by adding to your Crestmark Equipment Finance lease. We also feature a full range of asset management and certified disposal services for IT equipment. For more information about our IT equipment lease financing programs, please contact Crestmark Equipment Finance or call 888.999.8050.

How Much Is Enough to Borrow for Your Business?

When you’re struggling with meeting the financial demands of your business, you may need access to capital. Whether you’re a newer business or you’ve been established for quite some time, a shortage in cash flow can hinder your operations. It’s important to decide exactly how much you need to borrow when you’re worried about making payroll, securing supplies for an upcoming special project, or when you need to take care of unexpected equipment repairs. If you borrow too much, you’re spending more than you need to on interest and loan repayment and that’s money that you could be spending on other things. If you don’t borrow enough, you’ll be scrambling to cover your expenses.

Financial Planning and Review of Year End Reports

Here are some tips for narrowing down your budget to help you determine the amount of working capital you might need:

Forecasting Your Future

  • Use conservative estimates on leads, conversions, sales and profit margins.
  • Analyze previous monthly, quarterly and annual reports for a comparable estimate.
  • Learn your industry’s high and low seasons; not only when they happen, but why they happen.
  • Make projections for company growth, in both employee needs, equipment needs, and customer growth.
  • When you’re planning to borrow money for a new chapter in your company’s history, factor in the method, fees and interest associated with your financing.

New Businesses

If your business is young, it can be even more difficult to estimate how much you’ll need to handle growth. A common rule of thumb is to try to cover costs through the first six months of business, but it’s a good idea to build in a safety margin even above the 6-month mark.  Here are expense categories you should analyze:

  • Payroll – Add up the salaries and wages for yourself, your employees and anyone else doing work for your company. Include sales, human resources and seasonal help. Don’t forget the taxes and fees that must be paid to the government and to any associations.
  • Marketing and Collateral Expenses – Include the costs of signs and business cards, marketing materials, and product or service development.
  • Overhead – Estimate costs for your office and operations, including rent or mortgage, supplies, insurance plans and utilities, business licensure, vehicle registration and long-term equipment. Consider all of the necessities you’ll have to purchase, even furniture and computers.
  • Extra Expenses – Talk to someone experienced in your business or ask a mentor for advice. They would be a great resource for information about expenses, fees and pitfalls you may not have considered. Most business owners are willing to help with hints and experiences that will help other people avoid repeating their mistakes.

Established Businesses

If you’ve been in business for a while, you may be planning to expand your operations. If you want to get a loan or business line of credit, it’s important to organize your books and understand where all of your money is coming from and where it’s going. Ensure that you’ll have enough funding by making a list of your current and future expenses, as well as your sources of income.

  • Start with your routine expenses that are part of your monthly budget.
  • If you’re expanding, list any costs involved in additional personnel, equipment, office space and operating supplies.
  • For special projects, total the amount of capital needed to fund. Look at supplies, personnel, shipping and transportation.

Borrowing the right amount of money can help you grow your business without the aches and pain of overwhelming expenses. Once you’ve mapped out all of your costs and projected your income, you’ll have a better idea of how much you need to borrow. While there’s no exact science to estimating the right amount of financing, doing your homework will get you closer to a reasonable estimate.

Keep in mind that you don’t have to go through this process alone. The lending experts at Crestmark can work with you to determine the best solution. Give us a call today!

2014 IPO Update: A Look at the Debutantes

Believe it or not, 2014 is already more than half over. It started out with a bang when sixteen companies had their financial coming out parties in January, and it’s been a busy year ever since. There are 135 initial public offerings (IPOs) on the books so far for 2014. The step from being a privately held company to IPO has had a positive effect on some, but for others – not so much. Let’s take a look at five debutantes of 2014 to see how they’ve fared.

ipo-stockmarket

 

Parsley Energy

Parsley Energy, Inc. (NYSE:PE), based in Midland, Texas, went public on the NYSE on Friday, May 23, 2014. With operations in the Midland Basin, the independent oil and gas company has grown significantly from a two-person start-up in 2008 to a solid producer of 12,000 barrels of oil per day. Parsley’s initial offering of 50 million shares made their market entrance at $18.50. They closed last week at $23.73 with 117.81 million shares.

ServiceMaster

ServiceMaster Global Holdings, Inc. (NYSE:SERV) debuted with an opening share price of $17 on Wednesday, June 25. It closed at $17.95 on its first day. The commercial and residential maintenance and service provider started with an initial offering of 35.9 million shares. As of Monday, June 30, it was selling at $18.75 per share.

Eagle Pharmaceuticals

Not all IPOs have done as well as they’d hoped. Eagle Pharmaceuticals (NASDAQ:EGRX) went public on Wednesday, Feb. 12. It sold 3.4 million shares. The New Jersey-based company opened at $15, closing on its first day at just $12.83. It has rebounded a bit, bumping up to $13.57 as of Monday, June 30. Eagle Pharmaceuticals, founded in 2007, develops and commercializes inject-able drugs for oncology and critical care medicine.

Malibu Boats

Based in Malibu, Tennessee, this sporting boats manufacturer has made modest gains as one of the early IPO debutantes of 2014. Malibu Boats (NASDAQ:MBUU) opened at $14 on its first day, Friday, Jan. 31, closing at $17.03. It sold 7.1 million shares. As of June 30, the recreational boating industry continues to embrace Malibu, as its stock price was holding at $20.03.

GoPro

One of the biggest splashes in IPOs for 2014 has been GoPro (NASDAQ:GPRO). The innovative highline sports camera maker has gained a lot of attention with its recent offering, opening at $24 on Thursday, June 26. With much excitement around its first day, it closed at $31.34. It sold 17.8 million shares. As of June 30, GoPro was selling at $35.76.

As IPOs continue to garner attention in 2014, with many companies planning to go public before 2015 there’s hope for upcoming public offerings for the rest of the year. For companies that seek an increase in funding, the market has shown promise for some, but for others, it’s just been a struggle. Going public isn’t the only way to raise funding, however – if your business is in need of working capital, call us today to talk about options – we are happy to help!

The Shifting Role of E-Commerce in the U.S. Economy

The Internet’s impact on the U.S. economy is always growing. The share of online sales is slowly creeping up as the share of brick-and-mortar retailers continues to decline year over year.

E-tailers See Growth

A recent study by the Centre for Retail Research estimates that the online retail share of sales in the U.S. is expected to hit 11.6 percent this year. The figures for nine major countries, including G-8 nations France, Germany, Italy and the United Kingdom, were based on estimated online retail sales of goods. This is good news for U.S. e-tailers, who rely on 55 percent of the country’s population to shop online. Online sales that were ordered via mobile devices are estimated to be as much as 13.8 percent for 2013, and are expected to rise to 19.9 percent this year. These figures didn’t even include restaurant food, insurance, tickets, and gambling purchases.

crestmark-ecommerence

E-commerce Sales Are Up

The U.S. Census Bureau has also announced that for the first quarter of 2014, the total retail e-commerce sales are up 2.8 percent over the fourth quarter of 2013. That’s in increase of $71.2 billion. The estimate is adjusted for seasonal variation, not price changes. When compared to the first quarter of 2013, the increase is 15 percent. Unadjusted, the year-over-year comparison is an increase of 14.9 percent for e-tailers, and an increase of 2.2 percent for all retail sales.

Retail Storefronts Decline during E-commerce Rise

While e-commerce increases amid promising signs of an economic recovery in the U.S., more retailers are expected to close their brick-and-mortar storefronts. Staples, Inc. has announced that it plans to close 225 office supply stores by the end of next year. RadioShack, known for selling electronic gadgets and trending tech toys, announced in March that as many as 1,100 of its stores worldwide would close. In recent weeks, however, the company has decreased that number, citing disagreements with its lenders over the best way to manage its poor performance. According to reports by USA Today, RadioShack announced a loss of $191 million in the fourth quarter of 2013 over its 5,524 stores and dealer outlets. With 4,300 brick-and-mortar locations in the U.S., the company still plans to close a large number of stores, but no longer one-fifth of its locations.

The shift from retail storefronts to e-commerce business is hardly over, as there’s dust still left to settle in the broader shopping landscape. This transition is likely to bring more innovation to the marketplace, with brick and mortar stores finding new and creative ways to serve their customers, and internet based businesses working to take market share away from those same companies. This type of healthy competition is great for consumers though, and we look forward to seeing how things play out for the rest of 2014!

What Type of Lender is Right for My Business?

When business owners or executives first realize the need for working capital, it can be difficult to know where to start. People often ask, “Should I call my local bank? What about non-traditional lenders? What’s the difference between the two?” We hear this all the time, and wanted to provide a resource to help!

We recently released an Infographic titled “What Type of Lender is Right for My Business?” This provides a quick and easy reference piece for prospective borrowers to determine whether they’d be better suited pursuing a traditional bank line of credit, or to look into alternative financing. Each lending option has unique characteristics, and this infographic helps clarify how different business situations are best suited for certain lending options.

The infographic follows a flow-chart format, and leads users through a series of yes / no choices about their business. Key points that determine the right fit include:

– Does your business have three or more years of positive business history?

– Do you have limited or negative equity?

– Do you have limited or inconsistent profitability?

– Do your assets exceed your liabilities?

– Does your business have positive trends?

– Are there opportunities for growth?

By answering each of these questions, it’s easy to see whether your business may qualify for traditional or non-traditional lending. We are excited about this release, and hope that many businesses find this useful!

Crestmark Infographic Traditional vs Asset Based July 2014

Are you in the market for a business loan? If so, ask yourself the questions on this infographic and then give us a call to discuss! We’d love to help walk you through the process of figuring out what lending option would be best for you and your business.

Grad Students Take the Lion’s Share of Rising Student Loan Debt

Students getting college degrees are borrowing more money to complete their educations than they have in the past. Student loans have topped $1 trillion. A study recently released by the New America Foundation shows that student loan debt is outpacing all other types of loans except for residential mortgages. Students seeking advanced degrees comprise only 17 percent of student loan borrowers, but they’re getting the lion’s share of the money.

Crestmarks Graduates

The study revealed that grad students borrowed an average of $57,600 in 2012, as compared to just $40,209 in 2004. That’s an increase of 43 percent in just eight years. Students are hoping that advanced degrees will give them better employment opportunities in a struggling economy.

After completing an undergraduate program, many students are finding it difficult to land a job. The philosophy is that going back to school to get a higher degree will make them more competitive in the workforce. A bachelor’s degree is no longer enough for some careers. The New America Foundation research showed that some students with master’s degrees weren’t necessarily getting higher salaries, just hoping to get the edge over the competition. How much they borrowed was directly related to their field of interest.

For example, students borrowing money for Master of Arts degrees dropped $58,500 in 2012, for an average of $20,500 more per student. On the other hand, the average student financing a business administration master’s program in 2012 borrowed $42,000, only $600 more than their counterpart in 2004.

According to non-profit American Student Assistance, of the 20 million students attending college every year, about 12 million borrow money to help cover their expenses. The consumer Finance Protection Bureau reports that of the more than $1 trillion in student loans, $150 billion comes from private lenders, and the other $864 billion is connected to federal funding.

Understanding Your Business’ Buying Cycle and Making the Most of It

Making sales is part of running your day-to-day business – it’s what brings in revenue and keeps the business moving forward. We all hope that customers come to us ready to buy, but in reality, there’s a lot more to it than that.

Buying Cycle

The traditional buying cycle is broken down into three segments that your customers move through in the process of making a purchase. By understanding your business’ buying cycle, you can take the right steps and make the most of it.

Awareness

The first step in the buying cycle is when potential customers discover that they have a need for your product. They’re not ready to buy, but they are aware of their need and your potential to fill that need. You can find these potential customers through marketing efforts and by increasing awareness of your brand. Introduce yourself. Capture their attention without pushing for a sale. The use of email newsletters, blogs, and direct mail alerts about upcoming sales are examples of the soft, but necessary, approach during this fragile part of the buying cycle.

Consideration

During this second phase of the buying process, your potential customers are seeking information. They’re considering a purchase and want to be educated about your company and your products. The availability of information is critical in this stage. Prospects are likely to read customer reviews, visit your website for product descriptions and make comparisons of their options. Their sense of urgency has elevated beyond curiosity, and this stage is often triggered by an event that sparks an increased interest. For example, they may have run out of an item or have an upcoming project where use of your product could make or break their success.

Identify the various triggers that prompt people to buy your products and make it known that you can provide solutions to these problems. Build website and newsletter content around these issues. Make testimonials from previous customers available and accessible for those in the second step of the buying cycle. Quench their thirst for information, and continue to build their trust.

Making a Purchase

When someone is ready to buy, you need to be ready to sell. Customers want attention in this third and final phase. If they already have a contact for your company, it’s important that this person is available or that your customer can somehow initiate the sale right away. Providing around-the-clock automated ordering or live support is another option to help your customers make their purchases when they’re ready. Information about forms of payment and how to contact your company should be visible on all of your marketing materials and on your website to capture the lead and close the sale.

Identifying and understanding how your customers fit into the buying cycle can help your business gain qualified leads and increase your sales. So take a look at your business – what can you do to improve your customers experience in each of these stages? The proper planning and implementation here can be a huge step forward for any business.

Crestmark Featured in ‘The Secured Lender’ Magazine

Asset-based lending and staffing agencies make good business partners. It’s something that we’ve known at Crestmark for quite some time. The Commercial Finance Association’s “The Secured Lender” magazine recently featured Crestmark’s West Division President, Pat Haney, and East Division President, Steve Tomasello, in an in-depth look at how and why staffing agencies and asset-based lending companies are a good fit for each other.

In short, the article “Perfect Partners” explains how asset-based lending companies like Crestmark are able to understand, work with and scale to the long-term needs of clients like staffing agencies that are in a position to grow quickly. While their financial outlooks are promising, staffing agencies have needs that can’t be met by traditional lenders and standard bank loans.

Secure Lender

“Staffing’s only going to grow. It’s the second-largest segment in our portfolio, and we only see that continuing in the future,” Tomasello explained in the article.

In select industries, companies are hiring workers, but only on a temporary basis at the moment. That means they need the flexibility of staffing agencies that can handle the recruiting and screening process until this growth becomes more permanent. Staffing agencies don’t always meet the requirements of traditional lenders, making asset-based lenders ideal partners for meeting the rapidly rising costs of financing payroll, insurance, taxes and other related expenses.

“Strong cash flow is imperative for the staffing industry,” said Haney. “Without it, they may get so far behind on tax payments that they go out of business.”

Both the staffing agency and the lender need to understand how the other company works, especially when it comes to the lag time between when the employee is paid by the agency and when the agency is paid by its client company.

As with all successful relationships, communication, patience and flexibility are key factors in making the partnership beneficial to both the lender and the borrower.

Want to see the full article in “The Secured Lender” magazine? Read “Perfect Partners” here.

How Online Banking is Changing the Industry

Back in the day, people walked into their banks and stood in long lines to deposit checks or make withdrawals. With the birth of automated tellers, direct deposit and online banking, consumers have slowly withdrawn from face-to-face visits. Online banking is changing the industry and the role of bank branches has changed with it.

Online shopping concept, paying with a credit card

While online mobile connections make simple transactions more accessible and efficient, there is still a need for the local bank branch. A recent survey from Bankrate.com reveals that 30 percent of Americans haven’t visited a bank branch within the past six months. When they do go, the purpose of their visits is no longer to make a simple deposit or withdrawal – they want consultation and personalized attention.

Impact of Age

The Bankrate.com survey also found that the age of the consumer has an impact on how they do their banking. For example, 52 percent of banking customers age 50 and older have visited a bank branch within the past 30 days. Only 42 percent of consumers age 30 and younger have made their way to a bank branch in the last 30 days.

Older Americans are traditionally slower to adopt new technology, such as online and mobile banking, but as time passes, they have learned to embrace it. According to a study by Digital Insight, 36 percent of seniors and 60 percent of Baby Boomers were actively using digital banking in 2011, as compared to 40 percent and 64 percent respectively in 2013. That number is predicted to increase to 55 percent of seniors and 70 percent of Baby Boomers by 2016.

Impact of Technology

Fewer customers visit bank branches to handle routine transactions that can now be done on their mobile devices and desktop computers. As a result, the size and layout of bank branch locations is beginning to change. They’re smaller, and the teller line is no longer the central focus. The emergence of automated kiosks for express services and financial loan officers with tablets who can cater to customers anywhere in the room is a direct impact of technology.

While mobile and web technology are expected to continue eclipsing brick-and-mortar branches in the future, don’t count out the branches completely just yet. People may have taken day-to-day transactions into their own hands, but consultation for financing and resolution of account problems have come to the forefront of face-to-face banking needs, and the value of real human interaction there isn’t likely to diminish anytime soon.

Economic Impact Abounds As NCAA Narrows to Final Four

March may be over, but the madness is in full swing as the NCAA tournament comes down to the Final Four. With barely a week to go in this annual fascination with college basketball, companies large and small are feeling the financial effects – some good, some not so much. Whether they’re plagued by employees losing productivity or bolstered by a sudden influx of tournament-hungry patrons, the impact is undeniable.

Crestmark March Madness

A Blow to Productivity

According to a recent report from outplacement and career transitioning company Challenger, Gray and Christmas, more than 50 million American workers are participating in office pools. While the annual practice may have cost companies approximately $1.2 billion in lost production time in the first week of the basketball tournament alone, the firm has cautioned corporate executives to avoid taking a hard line against bracket pools, friendly discussions at the water cooler and those taking time out for updates. A blow to employee morale and loss of camaraderie could be even more costly to a company’s bottom line in the long run.

A Rise in Morale

While the setback to productivity has declined as the basketball games have transitioned to evening and weekend play, the excitement of bracket busters and newly formed kinships at the office continues. Companies that allow employees to wear their favorite teams’ colors or check office pool updates on the clock can still reap the benefits of enthusiastic workers. A pre-tournament survey by staffing services firm OfficeTeam found that 32 percent of the 300 senior managers surveyed believed that support of March Madness activities had a positive impact on worker morale, compared to just 20 percent in 2013.

A Boon to Business

On the other side of the financial fence, many merchants have seen a rise in business during the NCAA tournament. Hotels, restaurants and shops in host cities have experienced a surge in bookings, as have providers for air and ground  transportation. Mid-West bracket host city Indianapolis, for example, expected a $20 million spending impact from this past weekend’s showdowns between the University of Kentucky and University of Louisville, as well as the University of Tennessee and University of Michigan. Kentucky eked out a win against Michigan amid an economic boost for Indianapolis merchants.

Meanwhile, restaurants and sports bars throughout the country offering televised games with food and drink specials are drawing record crowds of their own. In some cases, employees for these businesses are picking up extra shifts and working longer hours to meet the demand.

With the semi-final games set for Friday, April 4 and the championship on Sunday, April 6, 2014, the eyes of millions of Americans are on the Florida Gators, Connecticut Huskies, Wisconsin Badgers and the Kentucky Wildcats. While there’s no doubt that the economic impact of the NCAA tournament has created both winners and losers, only three games remain until it’s back to business as usual.