By Ken Sweeney
The last twelve months have been one of the most dramatic and volatile periods in economic history. In order to mitigate the world-wide economic decline, financial leaders and central bankers have ordered a reduction in prime lending rates in order to stimulate spending. Many would agree that these record low borrowing rates are a good thing. However, as business, especially small business, comes out of the economic downturn, companies must not get comfortable with these low rates of borrowing as they have nowhere to go but up.
Therefore as small business owners plan for 2010 and beyond, care must be given to borrowing assumptions. Whether you are borrowing $10,000 or $1,000,000 the cost to finance that debt in the future is going to increase. This will hurt bottom line profits and the ability to invest with the free cash flow that your business may produce. Therefore, beware and be prudent in your planning!
Ken is currently the acting CFO for K&K Recycling Services, a Pickering, Ontario-based ferrous and non-ferrous scrap metal processing, brokering and recycling company operating in Canada and the United States. He is also a founding partner of Growth Equity Partners whose focus has been to support small to medium sized private and publicly listed companies execute transformational business initiatives since 2001. Visit www.growthequitypartners.com