Employer mandate delay — a new opportunity?
Sometimes opportunity knocks in unexpected ways.
Take, for example, the Obama administration’s decision to delay enforcement of the employer mandate provisions of the Affordable Care Act for a year, at least until January 2015.
Businesses that were wrestling with the challenge of how to pay for the anticipated higher health-care costs for their employees now have the opportunity to use their money elsewhere.
According to a recent article in The Wall Street Journal, about a quarter of small-business owners affected by the delay plan to invest in equipment and facilities, while 16 percent plan to add employees and 15 percent plan to improve benefits or increase salaries.
Making these moves now could make sense for your business too. Improving your company’s infrastructure or strengthening your team now, while you have some financial flexibility, may help you build profit margins so you are in a better position to cope with higher health-care costs down the road. With many indicators pointing toward a recovery that will pick up steam, it’s better to make capital investments while interest rates remain low. With the national unemployment rate at 7.4 percent, there are still qualified workers in many industries actively looking for jobs.
With so many other businesses seeing the delay in enforcement of the employer mandate as an opportunity to strengthen their operations, you should consider your options as well. Your competitors may be among those moving forward, and you will not want to be left behind.
Join us May 2 at TMA “Snapshot Series”
If you would like to learn what’s going on with the Philadelphia regional economy, and find out more about the Turnaround Management Association, join us Wednesday, May 2, for “Business and Media: How Does Philly Stack Up,” the second program in this season’s Snapshot Series presented by the Philadelphia Chapter of the Turnaround Management Association.
The program will feature Craig Ey, editor of the Philadelphia Business Journal. Having lived in and reported on several business and media markets, Craig will offer his insights on the economic outlook for Philadelphia, a “newcomer’s” view of Philadelphia and its prospects for the future, and the future of Philadelphia media.
The program at the Ritz-Carlton Philadelphia begins with registration at 3:30 p.m., with the presentation and a Q&A session starting at 4.
This event combines education with philanthropy, as TMA makes a check presentation to the Make-A-Wish Foundation of Philadelphia and Susquehanna Valley, the beneficiary of its annual fundraiser. The Foundation’s mission is to grant the wishes of children with life threatening medical conditions ultimately enriching the human experience with hope, strength and joy.
A networking and cocktail reception at 5 p.m. will conclude the program.
TMA’s educational events are open to members and non-members.
Register online at www.tmaphila.org.
Hope to see you there.
As economy improves, prepare to finance your growth
Every week, it seems, we’re seeing more indications that the long-awaited recovery is truly under way. The Dow Jones Industrial Average closed above 13,000 on February 28 for the first time in nearly four years. The S&P 500 has registered three consecutive monthly gains, the first time that has happened in a year. The national unemployment rate fell to 8.3 percent in January, its lowest mark since February 2009.
While these signs are positive, it’s quite obvious that the economy’s uphill climb won’t be anywhere near as rapid as its descent in 2008.
But the continuing good news should be prompting businesses to dust off plans for renovations or expansions and to start talking to bankers about how to finance them. Securing additional financing isn’t automatic, but here are some things you can do to better position your business to have its financing request approved.
■ Put together a complete package: Clearly explain the reasons for your financing request. Prepare business plan projections that show how additional financing will enable your business to grow. Present three years of financial records — tax returns, audits, financial statements. Prepare aging statements on accounts receivable and payable so your banker can see you’re keeping on top of your cash flow.
■ Have reasonable expectations: Allow appropriate time for the request to be considered, underwritten and approved; be prepared for requests for additional information
■ “Cash is king”: Ability to repay will weigh just as heavily as collateral in the decision process.
■ Demonstrate that you’re a good manager: If you have managed well during the downturn, your banker will be even more confident of your ability to manage well during the recovery. Show what you’ve done to reduce or control costs in the last couple of years: for example, reducing overtime, renegotiating insurance contracts, and/or limiting discretionary expenses.
(For more ideas, look here.)
Most of all, be sure to communicate regularly with your banker, even if you’re not quite ready to seek new financing. Make sure your banker knows how your business is doing. The stronger your relationship, the better your chances of success when you make your request for financing.