The January 2018 Small Business Optimism Index , put out by the National Federation of Independent Businesses, set a record with the number of business owners saying “Now Is a Good Time to Expand.” The 32% reading is the highest level since the survey began publication in 1973. Fueled by recent tax reform and growing optimism over a more favorable regulatory environment across the board, more and more businesses are tapping the financial markets for additional working capital to fuel this expansion.
Specifically, J.P. Morgan’s 2018 Business Leaders Outlook highlights two industries that most expect to benefit from recent tax reform: transportation and construction. An astonishing 43% of respondents plan to use their tax reform benefits to invest in capital expenditures. According to the survey, while transportation and construction are the two industries that stand to benefit most, they are also the same industries that are struggling the most to find and hire qualified technical trade labor. 56% of respondents highlighted technical or trade positions as the most difficult to fill. With unemployment at all time lows the competition over these positions is higher, and as a result, costlier, than ever before. As companies are looking to invest and expand, finding the right capital partner that understands the unique challenges facing their business is critically important.
For the past five years Expansion Capital Group (“ECG”) has been a leading provider of small business funding nationwide. ECG has provided approximately $250mm in funding since its inception, and while we work with businesses in nearly all industries, we’ve carved out an industry focus in both transportation and construction. These two industries tend to share a variety of traits that require specialized knowledge in order to properly understand them. Those can include:
- Seasonality based on geography
- High customer concentration
- Specific licensing and insurance requirements
- Higher than average Days Sales Outstanding (DSO)
- Significant capital expenditure requirements
- Milestone-based compensation
- Large, intermittent deposit trends
These unique characteristics tend to set these businesses apart from the rest of their small business brethren, and can make it more challenging to secure capital. ECG has the expertise and experience required to work with these businesses as a trusted capital partner. As the landscape for transportation and construction remains more positive than ever in 2018, ECG is excited to help these businesses maximize their growth potential.
Our mission has always been to create trusted relationships and responsive solutions to support the expansion of America’s small businesses. This year represents tremendous opportunities for businesses of all shapes and sizes. What would you do with additional working capital to help grow your business?