Working Capital – Business Owner’s Best Friend
Getting It • Keeping It • What happens when it’s gone

Day in the Life of Crisis
Tremors • Quakes • Wobbles
Success
Started 20 years ago and finally attained industry relevance
Perfect Storm
Welcome to Crisis
Personal
Crisis – OK now what do I do?
Don’t Panic • You are not alone • Everyone has faced it
Corporate Clock
Time Speeds Up • It’s a full-time job!

Best Defense: Managing Working Capital
Easy fixes • Begin Crisis-Proofing your Company
Company Life Cycle
Where are you on this curve?
Working Capital Cycle
Where are you vulnerable?
How Much?
Factors affecting working capital

Manufacturing Highest

Distribution Medium

Other thoughts
Business Cycle –
- Up market – growth
- Down market – cost cutting
- Seasonal – cushion for swings
How do I get it?
Senior Debt vs. Equity
Senior Debt
Term Loan:
- Advantage – fixed debt svc.
- Disadvantage – 100% drawn
Asset based loan:
- Advantage – draw as needed; fast build up of available cash
- Disadvantage – payback quickly as sales decline / offseason
- Weekly borrowing base – costs
Factoring:
- Advantage – simple formula
- Disadvantage – borrowing costs; must payoff past due accounts
Equity
Secured sub-debt:
- 2 part interest – pay and accrual
- Residual equity amount
- Looking for 18+% IRR
Equity:
- Control – % ownership
- Board of Directors
- Looking for 30+% IRR
Looking Bankable
Build Trust through Predictability and Visibility
Develop Comprehensive Business Plan:
SWOT analysis (strengths-weaknesses-opportunities-threats)
Monthly Reporting:
Working Capital
What happens when things go wrong.
Warning
Causes
Results
Case Study
Senior Debt
$15M Manufacturing Company:
Description: Privately owned manufacturer of commercial skylights. Asset-based line of credit.
Challenges
Solution
Distributing
$50M Shoe Distributor:
Description: Private Equity owned designer and distributor of women’s shoes. UK office. Asset-based line of credit.
Challenges
Solution
Service
$40M Temporary Staffing:
Description: Private Equity owned, multi-office provider of temporary personnel. Asset- based line of credit.