A professional services client that had been in business for several years was experiencing high growth. She had attracted the attention of large, well-known corporations who wanted her services. She needed to hire more staff to support the new business, but she didn’t have a clear picture of the costs, and she was short on cash.
Forecasting for Sustainability
We used our crystal ball to develop profit and loss forecasts to help predict the future. We determined how many new employees she’d need to hire and other expenses she’d incur to add clients and grow her business. Next, we needed to find the money to pay for those expenses.
Reducing the Cost of Debt
In our client’s first few years of business (prior to working with Momentum CFO), she was unable to qualify for loans from traditional lenders. Her only choice had been to borrow from online lenders. She obtained several loans with double-digit interest rates as high as 31%! Debt can be a useful tool to finance business growth, but it’s important to proceed cautiously. Unfavorable loan terms and sky-high payments can sink a business.
Results of Our Predictions and Preparations
- Momentum CFO worked our connections with lenders and helped her obtain a new loan at under 5% interest.
- She paid off the high-interest rate loans with funds from the new loan. Her cost of debt decreased by over 75%, saving her five figures each month.
- Her cash flow improved significantly. With more cash in her bank account, she was able to hire the staff needed to grow her business sustainably.