Is your business bankable?

The dictionary definition of "bankable" is: "to be considered powerful, prestigious, or stable enough to ensure profitability." If your business is bankable, it means it has earned status worthy of people investing their time, money and attention.When you are looking to grow your business requiring additional resources to achieve this growth, then analyzing how bankable your business is in the eyes of the marketplace is key to consider. 

Important to note is that I am not just talking about bankable from the standpoint of a bank or an investor providing funding to your business. This also speaks to appealing to new markets, potential employees and any other means required for your anticipated growth to be realized. Consider these areas of review to determine how bankable your business is for growth appeal:

1. Steady, Growing Profitability: Is your business showing a profit? This can be a quagmire for many business owners who pay their CPAs to lessen tax burden with a focus on showing as little profit as possible at the end of each fiscal year. By being so tax-liability focused, you could be hurting your growth appeal efforts. This is especially true when seeking funding from a bank or investor. If your business is not profitable, then why should they bank on you? Also, more savvy prospective employees will be interested in your profitability, because this is an indicator of stability in a paycheck that can be counted upon. 

2. Value-creating Distinctiveness: For customers to invest their money in purchasing your products or services and funding resources to invest in your growth, your business must be demonstrating and reinforcing on a daily basis its distinctiveness against direct and indirect competitors. If you aren't viewed as distinctive, then you are not viewed as valuable or bankable. Know how you are distinctive and continue to identify multiple ways to stand out in your marketplace. 

3. Manageable Debt to Equity Ratio: Both your business debt and your personal debt are scrutinized when it comes to funding your business. However, employees can also feel the repercussions in a business when debt dictates what they can and cannot do within their jobs, impacting effectiveness if not controlled and monitored properly. Cutbacks and streamlining that are not properly explained or positioned related to growth initiatives can cause the exact opposite belief to occur, which undermines morale and commitment to growth. 

4. Strategic Reinvestment: How you spend your money in the business speaks volumes to how dedicated you are to ongoing growth and advancement of your operations. If you spend money frivolously at the end of the year on equipment, excursions or other line items simply to get your profitability down, you may not be making the best spending decisions in relation to growing sales and opportunities for the business. Strategically calculated expenditures should be justifiable based on growth plans. This is especially key to demonstrate to a potential investor who needs know why profits have been impacted. If the investor sees the spending as a strategic reinvestment of profits into the business, then they will deem your business worthy of investing in too. Employees also scrutinize your spending decisions. Spending dollars on an extravagant party versus professional development may be telling an employee that his or her advancement and ability to serve you in the future is not valued.

5. Track Record: Long-term relationships with vendors, suppliers, employees and customers speak volumes about your company's track record in doing what it says it will do on all fronts. If turnover is high and return is low, this is a red flag to anyone seeking to invest money or time in your business. 

If you want to be viewed as powerful against competitors, prestigious and preferred by customers and stable and growth-oriented to investors, make these aspects of being bankable an ongoing part of how you review and monitor your company's growth potential.