 |
Turning a home-based business into a worldwide success takes business smarts. But as Barry Diamond, Chief Financial Officer at Frontline Focus International would attest, it also takes the right amount of working capital.
"The cash that you have in your company is a real enabler. First of all, it enables you to operate your business with some breathing room," he says. "What's more, working capital enables you to explore new opportunities that you might otherwise miss out on," he emphasizes.
The CFO is definitely speaking from experience. In 1993, Frontline Focus International began as the brainchild of CEO and company founder Kristi Woolley. Today, this innovative company is present in over 100 countries, offering its unique expertise in "creating memorable customer experience solutions." In the simplest terms, this firm uses a network of 85,000 agents or "mystery shoppers" to help companies get closer to their customers, measure customer service performance, and then provide coaching and strategies to improve the "customer experience." "Capturing that direct feedback and customer insight is essential for the success of our clientele," he adds.
Breathe easier
For Frontline Focus International, maintaining a healthy supply of operating cash in the business has also contributed to its own success. "At the end of the line, we have to pay a large pool of agents promptly, so having that cash is essential in our daily business," says Diamond. "Without working capital, we couldn't deliver on our payroll demands. It's a very basic but critical calculation for any company to make. At the end of the month, you need to look at your cash resources, compare what you've spent to what you've budgeted for, and adjust your plans as necessary," he stresses. "You want to be sure that you're well covered and not caught off-guard."
Identify your needs
The company went to BDC to assess its working capital needs and find the right financing solution. Frontline Focus International already had an operating line of credit with a chartered bank but was looking for financing to complement this. "We had been referred to BDC by an accountant and I was impressed by their presentation of services," says Diamond. "I think when you choose a lender, you want to be sure that you're working with an organization that has a genuine interest in your business and does real follow-up. BDC recognized that this financing would trigger exponential growth for us abroad. It was a vote of confidence that we would expand our company with exports representing 44% of our entire business," he says.
BDC can provide working capital for a wide range of needs including increased inventory, R&D expenses, e-commerce or exporting efforts, product development and marketing, or implementing quality solutions. In addition, BDC can arrange repayment schedules to help entrepreneurs keep as much working capital available as possible. BDC Consulting can also offer companies external advice on improving their cash flow and identifying possible options.
Exploit growth opportunities
A large part of their initial injection of working capital, says Diamond, was targeted at international market development. "Without that cash, we could never be where we are today," he stresses. The company relies heavily on client referrals for developing business on several continents. "We had begun to work in different markets and different languages, so our IT and interactive Web capacity also needed improving. As well, we needed to cover basic costs such as people traveling abroad," he explains. "Working capital in our case was a real growth driver."
Avoid depleting your cash resources
"Our daily operational expenditures can be demanding, so we were happy not to have to deplete our cash resources," says Diamond. The company also adheres to the premise that entrepreneurs shouldn't use working capital to finance fixed assets such as equipment. "We like to keep our cash for other important things such as business development!" says Diamond. "It's just a part of investing wisely in our company," he concludes.
|
  
|
|
|
