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#5 – Transform your Business

26 September 2019

Every week we have a look at a Moment of Life. In this fifth blog we talk about Transforming a Business.

Transform your business

Impressions count. But what if your business is not making the right impression anymore, or if it does not fit with the image you would like to enhance? Then it’s time to transform your business.

For some businesses transformations are normal. At some point the seats of a successful restaurant will wear out and have to be replaced. A hotel also has to renovate their rooms from time to time to make guests comfortable.

For other businesses transformations are less frequent, but just as important. As a marketing agency for example, you don’t want your office to be old and stuffy; it will limit creativity. Furthermore, you don’t want your employees to be uncomfortable in their seats or use slow computers, which limits their productivity. Examples of projects that fall under Transforming a Business are:

  • Replacing a restaurant’s old interior.
  • A storefront make-over.
  • Painting the walls to match the brand.
  • Replacing the air conditioner to make employees more comfortable.

Investments in the transformation of a business vary from small to very large, it depends on the project and the company size. Either way, the company has to finance the investment. If they are unable to do this from their own funds, the company can request a loan. We have done a number of transformation projects, such as Van Kralingen exclusive interiors B.V., who borrowed €100.000 for renovation works on their new facility.

Analysis by the credit team

A company can invest in the visible and invisible transformation of a business. The goal of an invisible transformation is to improve the working environment, by investing in new machinery or equipment. A healthy work environment stimulates and motivates employees to focus on the goals of the company and enables employees to increase their efficiency, capacity and productivity. A company can go through a visible transformation by redesigning the interior or adding new facilities. This enhances the customer experience and creates new revenue streams. Especially for businesses which serve clients in their own accommodation, it is important to keep up.

One of the pitfalls of a transforming your business, is the transformation period. During this period the company is unable to operate at full capacity. As a result, the company could lose revenue. It is important that a company has enough cash to pay their bills during this period. We at October help borrowers by offering them a grace period, thereby postponing the first capital repayment with a maximum of 12 months.

During the credit analysis we look at the revenue streams. For both the entrepreneur as well as October, it is crucial to determine costs and (potential) new revenue streams. One way to get a better feeling for what customers want and what they are willing to pay for, is performing market research and customer surveys. Not only does it support the growth of a business, but from a credit perspective validation also gives more comfort concerning the transformation and potential new revenue streams. 

– Alexander from the Credit Team in Amsterdam

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