Why all the excitement?

Have you ever blanched like I do when you see corporate announcements using the word “excited?” For example, “We are excited to welcome industry veteran Joe Blow to our company.” Or, “We are excited to announce our just completed acquisition of ABC Company.” Or, “We are thrilled and excited to report we have just been awarded blah blah blah.” In this last one, note “thrilled” is added to the excitement. Don’t get me started on that one please.

So, tell me if you can, why all the excitement? I don’t get it. There’s a lot going on all over the place that can seriously get me excited. Readers note: In an earlier draft of this message, I listed a number of matters that can get me excited, but, in the interest of your valuable time, I’m going to spare you that long paragraph.

In some future editions, I’m going to rant on other mindless corporate publicity, but, for now, I will move on to something really important and that is to remind you of what Capital Access Partners is all about. Ok, I realize most readers now head for the exits. But, a couple of you will be really polite and read on.

I am thrilled (haha) to ask you to remember why Capital Access Partners was formed. We advise promising North American businesses on their need for capital (debt or equity) and how best to get it by focusing on their compatibility with capital providers. Because the borrower’s circumstances may change over time, the capital provider needs to be able to respond thoughtfully to those changes. This compatibility is often more important than the cost of capital. At Capital Access Partners, we utilize our Optimal Pairing™ strategy to select capital providers most suitable for our clients because we believe Optimal Pairing™ = Optimal Results.

Let's Thank Them

There's a rather large group of people out there displaying vision, commitment, and guts. Other than a few who get lots of attention, they don’t draw many stares. Often, they face ridicule. Many are referred to as dreamers. Some are simply written off as crazy. Yet, they persist, and their numbers are multiplying. In our business, we see them all the time. I sometimes shake my head in wonder at their confidence and their focus. I ADMIRE THEM IMMENSELY. I bet you do too.

So, let's all together thank them. Who are these amazing people? You guessed it. They are today's entrepreneurs. Let’s thank them.

Where is tomorrow's employment, quality of life improvement, and prosperity going to come from without them? These people come from all walks of life, education levels, colors, genders, and family responsibilities. You can’t spot them in a crowd but if you’re lucky enough to ever meet them, don’t try to offer them a job. They will turn you down. They can’t work for you or probably anyone else. They are on a mission.

What would our world be like five, ten, or twenty years from now if suddenly no one anywhere decided to start a business? That is a very sobering thought. Now, realistically, lots of us can’t offer any practical help. But many of us can offer advice and encouragement. Do that if you can and you will be doing a small part to make our children and grandchildren better off.

Let's thank them!

Thinking the unthinkable

Not too long ago, all of us would have deemed it unthinkable that the United States of America would have difficulty borrowing money. Of course, right now, it has no such difficulty. It’s borrowing vast sums with relative ease.

Ok, but let’s peek around the corner to get a glimpse of what may lie ahead. Increasing federal deficits are dramatically enlarging the national debt. Should this continue, we can expect to see government interest costs consume an ever-larger share of the annual budget, crowding out defense and vital social programs. At some point, U.S. government obligations will be viewed as somewhat less than “risk free.” It’s been observed that some investors already think that way, especially after Moody’s recently announced it changed its outlook on U.S. government debt from “stable” to “negative.” A near future ”risk premium” isn’t out of the question.

What does the government’s debt troubles mean for business?

It’s simple: Business interest rates will have to increase also. The natural result of that is most businesses will require more equity in order to operate safely and profitably. That equity will be generating smaller returns than when it could be leveraged. Equity fund managers won’t be able to raise money as easily. Once promising projects and businesses won’t take off too easily. GDP growth will slow. Absent a political miracle, the U.S. economy will likely stagnate.

Doom and gloom? Maybe not. Your crystal ball might work better than mine. I could be wrong, but most of us can agree that interest rates will be high and stay high for quite a while.

Protracted high interest rates increase the likelihood of businesses experiencing more frequent working capital dramas. This makes it imperative they have partnered with a compatible lender who will react thoughtfully to their needs and is able to modify terms in a manner conducive to maintaining or increasing the value of the enterprise.

At Capital Access Partners, we are firm believers that businesses seeking capital of any kind should pay maximum attention to compatibility with their capital providers. Optimal Pairing™ = Optimal Results.