In this guide, you’ll find answers to questions about business growth and how to access the resources you need to take your operation to the next level.
Understanding and leveraging client analytics to grow your business
3 steps to using analytics to grow your business
Build with your community
"If you need to get quick feedback on the quality of a product you want to take to market, consider the low-cost approach of tapping into your friends, family and neighbours."
Position your business for growth: Key considerations
The first thing you should consider is the difference between scaling and growth. Usually, growth refers to an increase in sales volume with a corresponding bump in infrastructure to manage the additional market demand. Scaling a business, however, often involves taking on an increased workload in a cost-effective manner. To do this, you need a strategy to scale, one that focuses on new revenue and efficient systems.
If your business is thriving and you’re considering expansion, assessing your readiness is crucial. Growth requires a strong foundation in three areas: capital, capacity to scale, and management expertise. Start by evaluating your financial position—do you have excess working capital or the ability to inject funds to cover growth costs? Consider your efficiency and whether your systems can handle a significant revenue increase. Additionally, ensure your management team has the expertise to address the complexities of larger operations, including navigating more intricate loan agreements and project logistics.
Growth often brings challenges, such as cash flow issues or operational inefficiencies. For example, a construction contractor that doubles its revenues may face higher equipment costs, complex contracts, or timeline penalties that impact profits. To prepare, keep working capital on hand, refine processes like job quoting, and align overhead expenses with growth goals. Address gaps in your management team’s skills through training or hiring to avoid setbacks during expansion.
Your financial partner can support your growth journey by offering tailored financial solutions, such as term loans to access equity, margined operating lines to bridge cash flow gaps, and advice on loan agreements. They also connect businesses with experts to enhance operational efficiency. With the right strategies and resources in place, growth becomes a sustainable opportunity rather than a risky leap.
Nurture your business' profit-driving infrastructure
A pillar of financial wellness: Understanding and improving your credit score
Maintaining a good credit score is about more than just securing loans; it’s a cornerstone of financial stability. A solid score can unlock opportunities, such as purchasing a home, financing a car, or expanding your business. Your credit score reflects how well you manage debt and impacts how financial institutions perceive you as a borrower. Scores range from 660 to 900, with higher numbers signaling good creditworthiness. Lenders are more likely to approve loans and offer favorable terms to those with good credit. On the other hand, a poor score can limit your access to financing.
Credit scores are based on your credit report, which includes your borrowing history, payment records, and public financial information. While your score can fluctuate, you can take steps to improve it. The key is practicing responsible credit management and addressing issues that affect your score.
- Credit usage: This includes all your credit cards, loans, and lines of credit. Using too much or too little of your available credit can impact your score.
- Credit utilization: How close you are to your credit limits matters. Keeping your utilization below 10% is generally recommended.
- Payment history: Consistently paying bills on time builds a positive history, while missed payments hurt your score.
- Credit inquiries: Frequent or sustained applications for credit can signal financial instability to lenders.
Mixing business with personal: How personal credit scores influence business loans
When applying for a business loan, you may be surprised to discover how much your personal finances can affect the process. Many lenders, including CWB, consider a business owner’s personal credit score as part of their evaluation. This connection between personal and business finances often catches first-time borrowers off guard, but understanding it can help you prepare for success.
Why personal credit scores matter
Personal credit scores play a role in every business loan application. This score reflects how you manage your individual finances and can serve as an indicator of how you might handle business obligations. Lenders use this as one of several metrics to assess your financial habits and overall creditworthiness.
Additionally, many business loans require a personal guarantee. This means that if the business cannot repay the loan, the lender can pursue your personal assets. A personal guarantee reduces risk for the lender and demonstrates the confidence you have in your business’s ability to meet its obligations.
The role of personal and business credit scores
Both personal and business credit scores are built over time – think of them as a resume that showcases your financial reliability. By understanding the connection between the two and adopting healthy credit habits, you can position yourself and your business for better borrowing opportunities.
While both personal and business credit scores are considered, the balance between them depends on different circumstances:
- Personal credit score: Often more significant for newer businesses or those without an extensive credit history. It provides insight into your repayment habits and financial reliability.
- Business credit score: Highlights the company’s financial health, including payment history with vendors and creditors. It also reveals major events like lawsuits or financial disputes that could impact the loan.
For established businesses with strong financials, the focus shifts more toward cash flow, debt levels, and collateral rather than the owner’s personal score. However, consistency between personal and business credit management can strengthen your case.
If you’re uncertain about your credit situation or how it might impact your business loan application, reach out to your financial partner. Lenders like CWB can offer guidance, tools, and support to help you optimize your credit profile and achieve your financial goals.
Strategies to maintain and improve your credit score
Lending: A financial solution for business growth
Here are the five way lending products can strengthen your business finances:
By using lending products strategically, you can maintain liquidity, fund growth, and protect your financial stability.
Getting a business loan
Securing a loan can be a vital step in growing your business, especially when cash flow is tight and opportunities are on the horizon. Prepare for discussions about commercial real estate or general commercial loans following these tips:
What to bring to a loan meeting:
- Accounts payable and receivable (90–120 days)
- Financial statements from the most recent quarter
- Financial projections
- Recent bank statements
- Appraisal reports
- Environmental assessments
- Details on property assets
- Historical financial statements
- Financial projections
- Recent bank statements
Remember that additional details about shareholders (ownership percentages, corporate structure) and a personal net-worth summary for shareholders can enhance your application.
Collateral and loan-to-value (LTV) ratio
Common collateral types – assets used as a form of protection for the lender if a borrower defaults on their payments – include accounts receivable (insured accounts may increase limits), real estate, and other securities. LTV is used to assess the risk of a loan, and while it depends on the situation, funding is often capped at a certain percentage for owner-occupied real estate.
Timelines and covenants
Loan approval timelines can vary, but may be expedited for smaller amounts or urgent cases. Once approved, borrowers must adhere to covenants—terms designed to ensure financial stability for the borrower and provide protection for the lender.Breaking covenants can damage trust with your lender, but communication is key to good relationships, so keep your financial partner informed. If challenges arise, letting your bank know early helps maintain trust and opens the door to solutions.
By preparing thoroughly and maintaining open communication, you can build a strong partnership with your financial institution and set your business up for success.
Smart strategies to grow cash for your business
Advantages of Business GICs
Personal vs. Business GICs:
While both types protect your invested funds, business GICs are often used when businesses have an influx of cash for specific upcoming purchases (e.g., equipment or real estate). Personal GICs, on the other hand, are typically invested long-term for rainy days, short- or medium-term purchases or retirement. As a result, personal GIC rates are often more attractive than business GICs, as banks tend to offer better rates for money that stays parked longer.
Is a business GIC right for your business? Keep these considerations in mind:
- Maximizing growth: Assess if your funds could generate better returns by being reinvested in the business (e.g., by increasing sales capacity, buying software, or training staff).
- Access to working capital: GICs are generally not suitable for working capital, as they lock up funds for a specific amount of time. A liquid savings account may be a better option if you need access to cash for unexpected opportunities or issues. For example, our Flex Notice Account gives you more liquidity and line of sight on your cash.
Choosing the right GIC:
- Term length: Consider upcoming expenses. Solid forecasting, with the help of your financial partner, can help you decide whether a short- or long-term GIC suits your needs.
- Market trends: Stay informed about your business’ health and external factors like interest rates or economic trends.
- Rate environment: Track the Bank of Canada’s activities to anticipate rate changes, so you can time your investments more effectively.
Financing for your industry: Why finding a partner with niche expertise is critical for success
In an ever-changing economy, securing financing for your business, whether it’s in construction, hospitality, agriculture or any other industry, can be pivotal to navigating challenges and capturing growth opportunities.
What to look for in a financial partner
Seek a bank that specializes in your industry and understands its nuances—whether it’s dealing with seasonality, supply chain pressures, or construction challenges. A full-service financial partner offers more than just funding; they provide ongoing support and tailored advice to adapt to your business’s needs.
How to prepare for a meeting
Before meeting with a lender, define clear goals and priorities. Focus on your biggest challenges and opportunities and consider how financing can help address them. Be prepared to discuss your business’s strengths, weaknesses, and potential growth areas.
To get started, have these materials ready:
- Financial statements (12-month income statement, year-to-date income statement, and balance sheet)
- A summary of your loan request and corporate ownership structure
- Biographies of key principals and guarantors
- Three-year projections with detailed assumptions
What to discuss with your lender
Specialized lenders can offer valuable insights into:
- Industry trends: Current challenges and opportunities in specific industries, such as in hospitality, agriculture or equipment financing
- Brand positioning: Your brand lifecycle, franchisor support, if applicable, and plans for reinvestment or succession.
- Operational metrics: Data on sales, margins, and unit economics to assess profitability and sustainability.
Attracting and retaining employees with employer-sponsored savings programs
Group savings programs for all businesses
Whether a small startup or a large firm, businesses in various sectors—ranging from law and accounting to construction and trucking—are benefiting from these programs. Group savings plans are adaptable to any business, regardless of size.
The value of a matching component
To make a group savings program truly effective, a matching component is essential. Businesses should be ready to contribute, as this increases the attractiveness of the program and helps retain employees and reduce turnover. Without matching contributions, employees may not see the full value of participating. The cost of losing an employee is far greater than contributing to their retirement savings.
Tax benefits for employees
Employer-sponsored RRSPs come with tax advantages for both employers and employees. While individual RRSP contributions offer tax benefits upon filing taxes, group RRSPs provide immediate benefits. For example, a $100 contribution might reduce an employee’s taxable income, but their net pay could only decrease by $70, offering a direct, instant tax saving.
Financial education for employees
In addition to the savings plans themselves, financial literacy is a key component of a high-quality group savings program. The program includes an online portal with educational resources, as well as access to financial experts. This helps employees make informed decisions about their finances, covering topics like budgeting, savings, and credit management.
Demonstrating employee care
Offering a group savings program is a clear message to employees that their financial well-being matters. In a time when many Canadians face rising costs and greater economic uncertainty, long-term savings plans provide crucial financial security. This is a way for businesses to show appreciation for their employees' contributions to the company’s success.
In summary, offering a group savings program not only helps attract and retain talent but also demonstrates a company’s commitment to its employees’ long-term financial security.
