The Small Business Dilemma: It isn’t all about credit!

I was interested to see a front page story in this past Sunday’s Hartford Courant.The story was about small business, and featured Hygrade Precision Technologies, Inc., a fellow CTMA member. Hygrade’s President, John Salce, has been an outspoken activist on the behalf of Connecticut manufacturers. He is featured in this story, which dispels the myth that small businesses are lacking credit because of banks unwillingness to lend. Salce candidly shares his challenge of meeting his debt obligations when his business has been hampered by economic decline.

Horst Engineering doesn’t have any credit issues, though some of our lenders have changed the terms of loan agreements. When we renewed some credit lines, we were faced with the introduction of rate floors, a practice that banks are pushing with fervor as major rate indices hover at all time lows.  Leading up to the financial crisis and subsequent recession, we had managed our balance sheet wisely. Thus, we didn’t face challenges when the orders slacked off. The same cannot be said for many other small businesses. Many overborrowed during the good years, and then when sales plummeted, they didn’t have the cash flow to service their debt.

Banks lend based on your past performance, asset base, history of success, strength of management, and forecast profits. Banks are not to blame for making this crisis worse. Businesses need to manage through the crisis, build stronger balance sheets, balance their debt obligations, and grow their revenues. Hypothetically, if  Horst Engineering could borrow even more money, it wouldn’t change our fiscal outlook. Our growth has been impacted by sluggish demand for the products we sell. Borrowing more, or borrowing at more competitive rates, isn’t going to change that.

We are re-engineering processes in an effort to improve service with our existing customers while diversifying into new markets; both in an effort to grow again. Only increased revenues and profits will get our business and the rest of the economy moving again. Sure, credit isn’t as freely available as before this downturn, but that is a good thing. We can’t create jobs out of thin air and the banks are not to blame for this. Small businesses should be revisiting their value proposition, eliminating waste, and finding new ways to benefit their customers. Executing is harder than ever, but it needs more focus than ever.

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I ❤️ the @eastcoastgreenway ### #eastcoastgreenway #sevencycles #teamhorstsports #carfreecommute
Finally made it to the @breakawaybrewhaus in time! Technically I was late, but Matt and Cindy are Bolton neighbors. I left my empty bottles a month ago and now they are full again. You can easily fit three in a @dillpicklegear pannier. I’m STILL waiting for my pannier’s lost mate to find its way home. #carfeecommute @horsteng #teamhorstsports #crossspikes @seven_cycles #sevencycles #bicycle #beer 🚴🏽🍺
A fun filled day of #mountainbike goodness at the West Rock Superprestige Short Track final. The @the_ccap #teamhorstjuniorsquad and the older dudes on #teamhorstsports all rode like champs. We gave it our all and left it all out there on the gnarly course. There must have been at least 15 of us in a variety of categories, plus a couple of runners; and our families, who cheered like madmen/madwomen. Big thanks to the Laurel Bike Club/D’Aniello’s Amity Bicycle. @horsteng #crossspikes
A 5K #trailrunning race was a great way to kick off today’s West Rock Superprestige Short Track #mountainbike finale. It suited the Livingston women just fine. @trailrunningmom and Little D were both on their respective podiums after two laps of the gnarly course. It was a small but dedicated group of runners who came out for the inaugural run. Good work by the Laurel Bike Club/D’Aniello’s Amity Bicycle crew. #teamhorstsports #shenipsitstriders 🏃‍♀️⛰🏆
Old Lyme to Bolton with a diversion to see one of my favorite barns. #madeinusa @horsteng @seven_cycles @dillpicklegear #sevencycles #horstengineering #crossspikes #teamhorstsports #july4th #independenceday
Anytime a #triathlon swim is canceled (due to a #thunderstorm ⛈), the advantage goes to the Livingston’s. We rarely lament a run 🏃‍♀️when it replaces a swim. 🏊‍♂️ @trailrunningmom took the victory in the mud. 🚲 Shep notched a Tiny Tri win. Boy did it rain ☔️at #windingtrails tonight! 🌩 ### #Duathlon #teamhorstsports @horsteng #crossspikes
I rode from @horsteng to Cornwall Bridge to see @trailrunningmom finish her 36 mile (+8,094 feet ascent/-8,048 feet descent) solo training run on the Mohawk Trail/Appalachian Trail Loop. Better her than me! She crushed it on a hot day in 9h38m. I had a lovely ride on some of the best roads in #Connecticut and arrived at the trailhead 20 minutes before she did. We followed it up with a date @floraweha ☀️ 🚲 🏃‍♀️ #trailrunning #cycling #teamhorstsports #shenipsitstriders #ultrarunning @seven_cycles #sevencycles @appalachianmountainclub @ctforestandparkassociation @ultraspire #ultraspire #veganathlete
Passed through #Toronto late in the day yesterday during a short biz trip and discovered #dufferingrovepark the fabulous #reflexologyfootpath and the farmers market.
#nembafest was an absolute blast. This morning, #teamhorstjuniorsquad and #teamhorstsports put in one more monster #kingdomtrails ride. These #trails are awesome. We saw so many friends out there. The rain calmed down Friday’s dust. We missed some other big events like #manitousrevengeultra and @wser , but this event is on par. 3,000 riders in the hills of #vermont Today was the #mountainbiking equivalent of a #powderday 🚵‍♂️⛰ ### @nemba_mtb @kingdomtrails @horsteng @the_ccap #horstengineering #crossspikes

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