Research indicates that most business decisionmakers wait until equipment fails to replace it. Most lessees wait until the last minute to renew, extend or otherwise make decisions at the end of lease. And most dealers shake their heads at what appears to be a lack of planning on the part of their customers for an inevitable event that when handled with haste could lead to undesirable business outcomes.

Yet when asked if they had a comprehensive plan to fund their business across the different kinds of capital,

73% of dealers responded that they seek financing or capital “when an urgent need arises” or “when there is a service failure.”

Hmm. It might be time to practice what you preach. Proactive and strategic capital planning should lead to everything from more effective inventory management and improved customer experiences to happier employees and an enterprise that could one day sell for a higher EBITDA multiple. A simple way to begin developing a capital plan is to examine the four core capital categories you need to address and ask yourself a few starter questions in each category.

Equity or “Ownership” Capital: This is simply the owner’s investment in the business and is always the most expensive form of funding. Or said another way, your money always costs more than money from a lender.

• Do your growth plans require investment that outpaces what any traditional lender could offer?
• Does your ownership investment position you to maximize lower-cost debt leverage?
• Do your long-term plans involve selling the business to recover your equity?

Working and Growth Capital: This type of capital may be your revolving line of credit, inventory financing, other term debt not specifically secured by a fixed asset (equipment or real estate, for example) or some combination of all of the above.

• Does your revolver allow for effective management of inventories, or do you need a separate facility for your inventory needs?
• Does inventory financing unnecessarily require juggling multiple financiers and manufacturer credit facilities?
• Can you fund general growth and working capital needs without disrupting capital availability to manage inventories?

Fixed Asset Capital: Funding equipment, real estate and other fixed assets is a separate category of capital need often blended with other forms of capital out of convenience instead of strategy and financially sound decision making.

• Does real estate ownership vs. leasing make an impact on your long-term enterprise value without impacting flexibility?
• Can your office environment and technology infrastructure provide a competitive advantage?
• Does your service and delivery fleet need to be upgraded to demonstrate the professional image of your company?

Capital to Power Sales: Your customer finance program is critical to power sales. But as customer demands and emerging technologies have required evolution of your business model, customer finance programs should reach far beyond quick, easy and competitive.

• Is your customer finance offering fully integrated with your internal systems in order to maximize sales efficiency while creating a best-in-class customer experience?
• Is your customer finance program a consistent competitive advantage or simply a necessary payment function that looks like your competition’s?
• Could a customized, private-label finance program elevate your brand in the market and create more customer loyalty in the process?

Once you go through this exercise with your leadership team, you may find you have more questions than answers. That’s when it’s time to talk to your existing and potential relationships for each of these categories. And as you embark on that journey, keep in mind what relationships are able to create truly customized solutions that may even touch several categories of your capital need.

These are just a few ideas and a simple structure for how you can start proactively developing a capital plan for funding your company today and tomorrow.