Is Your Equipment Leasing Company Flexible Enough?
There is no perfect season, there is no perfect company and there certainly are not any perfect CEO’s. Now that we have that out of the way lets discuss the reality of seasonal cash flow and businesses that have historically gotten very good at making lots of money while their proverbial “sun is shining” but then learning to save, cut back and scrimp to save that money to cover debt while their cash registers are not ringing. By definition a “seasonal” business is one that relies in some fashion to the changing of the seasons from one to another. Seasonal in this context could also relate to a business that is focused on specific events like holidays, sporting events, local celebrations in a specific community or even the beginning or ending of the school season.
There are more businesses that fit into this category than you might realize including:
- Ski Resorts that only have a 3-4 month window of opportunity if the weather cooperates
- Landscaping businesses either commercial or residential that have to wait for the thaw and then lawns to dry out and operate only until it gets cold. However, some do not have to wait to clean the snow off of the teak table or shovel the driveway, as they can start doing that at the end of the blizzard.
- Retail operations that make 90% of their profit at the Christmas season and then hunker in for the next 10 months
- Commercial photographers that make their living taking year book and graduation pictures for sale
- Bed and Breakfast inns or lodges in a resort town, could be a winter opportunity or summer only
- Service businesses like lawn fertilization, roofing, landscaping, and many more
Let’s face it there are many thriving businesses that have had to learn to manage cash flow as a way of life.
So what happens when the cats that are grooming the slopes at the ski resort need to be upgraded or replaced? How about the mowing equipment and trenchers that needs to be replaced and then idled for 6 months or more of the year for a landscaping operation? How about the destination lodge that desperately needs to upgrade their kitchen or heating and cooling systems before the next season hits? There are 100’s of stories from real business owners struggling with operational realities that most “non-seasonal” companies that enjoy a steady cash flow year around with an occasional great month just don’t understand.
If you own or operate any of the above businesses you should explore “flexible terms” within your equipment leasing agreements. Most leasing companies using their own capital to finance their client projects understand the need to be flexible in loan repayments to match the cash flow of the business is critical in creating a long-term relationship beneficial to all. If your equipment leasing company refuses to discuss this reality with you then perhaps you are sitting at the wrong table!
In a world dominated by electronic communication, 140 character twitter feeds and 30-second videos, it’s nice to know there are financial service providers in the market that care about the businesses they serve and do all they possibly can to make the first transaction be the stepping stone to the 20th. That only comes through people taking care of people in the way that we all hope for but rarely experience.