Brad Bayless Publishes Article for CoBiz Magazine

Franchisee financing
Be prepared with a business plan
Brad Bayless

There are more than 780,000 franchise establishments in the U.S. that support nearly 8.9 million direct jobs and $890 billion of economic output for the U.S. economy. Big business and growing.

Franchise businesses are expected to grow and create more jobs at a faster pace than the rest of the economy in 2015 for the fifth consecutive year, according to The Franchise Business Economic Outlook: 2015 by the International Franchise Association (IFA) Educational Foundation and IHS Economics.

And while this sector is growing and profiting, there is often one big roadblock to starting up and/or expanding a franchise – financing.

While some franchisors offer their own in-house financing programs, or have partnerships with a particular lending company, there are many situations where the parent company doesn’t offer financing or additional financing options may be required. The good news is there are opportunities available for franchisees that need to seek financing on their own and for situations where franchisors are willing to lend support their franchisees throughout the process. Read more and comment.

Brad Bayless Authors New Article for CoBiz Magazine

Riding the wave into 2015
Create growth opportunities for your business
Brad Bayless

As we dive headfirst into Q1, we are likely to see companies investing in additional resources, whether that be people, equipment, software or infrastructure. It’s the time of year when change is ripe, and with confidence on the rise, we’re poised for increased opportunities for growth and change as the door swings open to 2015.

Privately held U.S. companies are entering the New Year with strong profitability and healthy sales growth, according to Sageworks, a financial information company. “Over the past twelve months, private companies are growing sales at an annual rate of 8.6 percent. Private U.S. firms are also seeing their highest net profit margins in three years, at 6.6 percent.”

With increased sales comes the need for additional resources to support growth, enhance employee productivity and improve operations so deal flow can continue.

According to Ernst & Young (EY Divestitures), the dynamics that made 2014 a record year for U.S. deal making will continue into the new year, pointing to ongoing buoyancy for the M&A market in 2015. This trend is likely to stay on course as 81 percent of executives expect the deal market to improve in the next 12 months, while 41 percent of U.S. companies have five or more deals in their pipeline versus just 8 percent of companies six months ago.

This is good news on all fronts and sets the stage for confidently marching into 2015. For companies who want to take advantage of the positive trend, are in a growth mode, in need of upgrading their capabilities from the previous year, or have been involved in recent mergers or acquisitions, a variety of financing opportunities exist. Read more and comment.

Industry News Report Positive

By Brad Bayless

I just returned from the ELFA Annual Conference where attendance was up and above previous year’s records. The Association’s Monthly Leasing & Finance Update out today also shared positive sentiments —  “New business volume Up 21 percent year-over-year, up 31 percent month-to-month, up 8 Percent year-to-date.” Good news for the industry and our clients in terms of credit approvals and access to commercial financing for hiring, technology enhancements and equipment upgrades.

Brad Bayless’ Authors Article for ColoradoBiz Magazine

Winning the sale…and growing your customer base
Brad Bayless

I’ve been in sales for most of my career – which is to say more than 25 years. I’ve learned the ups and downs of the game through trial and error and from several mentors over the years who’ve helped steer me in the right direction. As a veteran of the finance industry and a former small business owner, I’ve learned a few keys to success for creating lasting relationships with customers. The following are a few highlights for winning the sale and growing your customer base in the process.

Ask Questions

Focus on the customer, not yourself. Ask open-ended questions to learn as much as you can about the customer’s business and their current situation. This will help you determine whether the client truly needs and will benefit from your offering.

Solve a Challenge

Provide a solution to a challenge or problem the client is experiencing. What pain can you help solve? Can you help them free up cash? Acquire the technology or equipment they need to operate or expand? Bundle multiple lease items? If you can offer an optimal solution you will prove your value and help set the course for a long-term partnership. Read more and comment.

Companies Continue Adding Jobs. Confidence Up.

Companies in Metro Denver expecting to add workers increased from this past quarter with unemployment down. Consumer confidence and business travel also increased.

“Business travel drives business growth. If you see strong numbers here, that likely means good things for the U.S. economy for the rest of the year.” Mike McCormick, executive director and COO, Global Business Travel Association.

The Equipment Leasing & Finance Foundation released the June 2014 Monthly Confidence Index for the Equipment Finance Industry last week.

When asked about the outlook for the future, David Schaefer, Chief Executive Officer, Mintaka Financial, LLC, said, “Application volume, approvals and funding are all up and are at record post-recession levels. Portfolio performance in terms of delinquency is still extraordinarily low. We are optimistic about 2014 and expect to exceed our yearly origination goals.”

Biz Leasing Continues to Increase

The Monthly Confidence Index results for the last two reported periods provide continued optimism for the year ahead, according to the Equipment Leasing & Finance Association with confidence for the industry close to a two-year high.

“We are optimistic about the demand for businesses to purchase equipment and the need for financing to acquire that equipment,” says Brad Bayless, VP, Dynamic Funding, Inc.

“Beginning 2014 with a 63.3 MCI, the 2nd highest mark in the last 24 months, is also extremely promising and serves as evidence of stability and positive velocity within our industry. In the Monthly Leasing and Finance Index, origination volumes year-over-year are also up, while maintaining historically low delinquency and charge-offs; an indication of continued health. The combination of these positive indicators creates a huge amount of excitement for potential growth.” Read more.

Capital Spending to Reach All-time High in 2014

U.S. businesses, nonprofits and government agencies will spend in excess of $1.5 trillion in capital goods or fixed business investment (including software) this year, financing more than half of those assets, according to the Equipment Leasing and Finance Association (ELFA).

ELFA forecasts the following Top 10 Equipment Acquisition Trends for 2014:

1. Investment in equipment and software will reach an all-time high in 2014. As the U.S. economy and underlying economic fundamentals, including GDP, continue to improve, business investment is forecast to reach a record $1.5 trillion in 2014.

2. Equipment replacement demand will continue to drive investment. Stronger economic growth will boost businesses’ confidence and appetite for capital expenditures, but overall, equipment already in place can be used at a higher capacity. Until businesses find they need to expand their capacity to meet operational demands, their equipment investment will be in replacing existing aging or obsolete equipment.

3. Demand for equipment financing will increase due to greater stability in the federal budgeting process. Businesses will enjoy a greater level of comfort than they have in recent years to make their equipment acquisition decisions for 2014. The two-year budget agreement passed by Congress reduces fiscal pressures and lessens the chance of a potential government shutdown, while a rising tide of economic growth will lift all boats. As equipment acquisitions increase, so will businesses’ demand to finance them.

4. The global economy will play a part in the “big picture” impacting businesses’ equipment acquisition decisions. The lack of long-term breakout growth and expansion in equipment acquisition has some of its causes beyond U.S. shores. External factors like the stagnant Eurozone, foreign oil prices and the cooling of a hot Chinese economy, which have combined to impede growth, will continue in 2014.

5. Rebounding of some industry sectors will spur varied equipment types. Growth in investment is forecast for numerous equipment types, some of which will be the result of increased activity in the housing and energy sectors. The rebounding housing industry will have spillover effects on equipment verticals, including construction as well as trucking and rail transportation to ship homebuilding supplies. Manufacturers’ plans for billions of dollars in investments to take advantage of cheap, rapidly expanding U.S. supplies of oil and natural gas will expand production capacity for energy and downstream products, such as petrochemicals and plastics, and increase demand for industrial equipment.

6. A majority of U.S. businesses will use some form of financing for equipment acquisition. In 2014, investment in plant, equipment and software in the United States is projected to reach $1.5 trillion, of which 57 percent ($860 billion) is expected to be financed through loans, leases and lines of credit, a slight uptick from 55 percent in 2013. In a continuing trend, seven out of 10 businesses will use at least one form of financing to acquire equipment.

7. Credit market conditions will remain favorable for long-term equipment financing. In a continuing trend from last year, businesses will generally find an increasing credit supply as they consider equipment acquisitions.

8. A low short-term interest rate environment will continue, while long-term rates will rise but remain below the historical average. Businesses that want to conserve cash and take advantage of the many other benefits of financing their equipment acquisitions can look forward to the prospect of continued low short-term interest rates until 2015. Although the Federal Reserve’s policy agenda for 2014 will likely result in a rise in long-term interest rates, inducing some companies to lock in lower rates, they will remain low enough by historical standards to keep financing an attractive option for acquiring equipment.

9. Technology innovations will continue to improve the customer experience. While demand for software and technology equipment is expected to remain strong, equipment finance companies will use technology to optimize their delivery and fulfillment systems around customer service. They will meet a growing demand for cloud and mobile technology as well as access to real-time company data and business intelligence.

10. Long-awaited changes to the lease accounting standard will continue to be debated. A new draft of proposed lease accounting changes issued by the Financial Accounting Standards Board and the International Accounting Standards Board issued in 2013 generated substantial opposition for being too burdensome and complex. As a result, the Boards will continue re-deliberations into 2014 and will conduct additional meetings to address concerns before changes are adopted.