It’s A New Financial Landscape

It’s A New Financial Landscape

by Steve Bailey

As the COVID-19 event unfolds, we are seeing garden centers closing down temporarily or reducing hours. Either one of these actions reduce Revenues and the ability to fulfill your Center’s financial obligations.

Along those lines, there are several financial issues to consider and address in the coming days. It will be far better for you to meet these challenges head-on rather than stick your head in the sand and hope they won’t happen. Be proactive!

If you have a Mortgage, communicate with your Lender NOW. You’ll earn more points by approaching your Lender now and assessing your financial position. Let them know you intend to fulfill your obligations to them. Determine if there is wiggle room for refinancing your loan at a lower rate, given the reduction in the prime. It never hurts to ask. Do these now before they become overwhelmed. And they will be in that position at some time down the road if they are not already.

If you have a Line of Credit and foresee timely repayment may be difficult, contact your lender. Again, insure them you intend to repay it on time. If you are maxed out on that line and will not be able to repay on the original terms, discuss the situation with them regarding a short extension. Try to avoid refinancing the line of credit into long-term debt. The money was originally intended for short-term use. Short-term debt converted is expensive.

If you have a Line of Credit and have not used the full amount, insure it is still available. The recession of 2008 taught us that lenders can revoke a LOC if it isn’t being used. You don’t want a surprise at a time of need.

If you have a Line of Credit and have not used the full amount, consider maxing it out. While the interest rate might be higher than long-term debt, you won’t have to go through all the refinance steps and drawn-out process to get money. You can always repay it if you don’t use it; you’ll just pay a little extra interest but could receive peace of mind.

Take your past three years Profit & Loss to the meeting. Knowing where you’ve been and where you are going (next step) is very important to the lender.

Construct pro-forma statements for your lender to review. These include a projected 12-month Profit & Loss and Cash Flow. This is fairly simple to do using our own accounting software, but be aware you will have to tweak the report to be totally accurate. And, in this case, you do want to be totally accurate.

They will ask for your current (12.31.19) Balance Sheet. First, insure that all Assets are updated and correct and that all Liabilities are accurate as well.  In most garden centers, the Balance Sheet is for the business only and does not include the land holdings of the Owners. If this is the case, export both Balance Sheets (business and land-holding entity) out to Excel and combine the line item Assets and Liabilities. Give them the total picture of the financial health of your business. Take the printed copies of the individual entities to validate the combined Balance Sheet.

Know what your Balance Sheet is telling the Lender. The Balance Sheet is the ‘report card’ for how you have managed your business from the first day it opened. For that reason, your Lender will be evaluating the Balance Sheet even more so than the three one-year Profit & Loss Statements for clues to capability to be a good business partner with their institution. If you don’t know how to calculate and interpret the three basic Balance Sheet ratios – Current, Quick, and Equity to Debt – call me and let’s calculate them together and discuss their implications.

If it appears your Lender may be hesitant to loan you money due to your past performance or the economic situation consider a SBA loan. The Small Business Administration has just opened up loans to bridge the current economic downturn, promising faster-than-normal approval times. Be aware these loans may be anywhere from 0.5% to 1.0% higher than traditional lenders, but they also might be the only option.  For more details, go to:

Be honest with yourself and your Lender. Know your capabilities and limitations and understand theirs. You should both be on the same side, not opposing each other. Take the proactive stance in the steps above and above all – impress the heck out of them! If they know you know what you are talking about, they’re much more likely to work with you.

An additional note.  If you do have to close your doors, check your general business insurance policy. If it contains a Business Interruption Rider, you might be able to file a claim fairly quickly. Even if you don’t see it, call your insurance agent and inquire as to if your Garden Center are covered under your coverage.

Use The Group Service Providers as a resource.  I am speaking for all of us who work with you, we want you to flourish. We’re here to answer questions or help in any way you need.

We’re ALL in this together!

Want to discuss how to review or consider these options with Steve Bailey? Call or email him!
Steve Bailey
Cell: 618-521-5225‬
REMEMBER: Your interaction (by phone and email) with Group Service Providers such as Steve Bailey, Robert Hendrickson, Sid Raisch, Jean Seawright, and John Kennedy are included in your retainer!



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