Patrick Noveck
Running a business and planning in an economic landscape of rising interest rates, inflation and possible recession is challenging. Patrick Novack, VP, Relationship Manager at Coastal Community Bank, regularly speaks to his clients about the current state of the economy and how to plan for the present and the future in the current uncertain climate.
“I regularly speak to my clients about their concerns about the economy,” Novack said. “It’s a real concern. I think more and more business owners are just thinking, okay, how do I strategically position my business to weather events that may come down the road.”
During these discussions, Novack regularly encourages reflection on liquidity and his network of trusted professionals, reminding them that the economy is cyclical and constantly evolving.
liquidity
Novack explained that liquidity is an issue that he regularly discusses with clients. “Being able to have more cash in the bank allows you to weather increases in product and supply prices, economic changes, and so on. Not all companies may have access to excess liquidity, but it’s a good time to stockpile cash when you can,” Novack said. “When a business owner is short of cash, it’s also a good time to talk to their banker about a line of credit that would give them access to the liquidity they may need as they maneuver through the current economic environment.”
Communicate with your network of trusted professionals
“I think it’s imperative for any business owner to have a network of people who can help advise them in an economic environment like the current one and any other business planning strategy,” Novack said. “It’s a good time for business owners to stay close to their network of people and make sure they have all the information they can.”
Novack points out that a trusted network often includes an accountant, lawyer, investment advisor, and banker. Not only is this network an asset to business decisions and strategies, but professionals on the network can also provide you with recommendations for other business needs you may have. Novack explains, “For example, if your organization needs to improve IT infrastructure or need help with fraud prevention, the team of experts can provide recommendations for service providers that can help. Or if a company has excess cash, investment professionals can offer options where would be a good place to hold now, depending on the timing of future needs for those funds.”
As businesses grow and change, Novack advises business owners to review their network annually to make sure it’s still a good fit. “It’s a good idea to review them and make sure they still meet your needs,” he said. “Your business can change and grow just like yours. Whether it’s an accountant, lawyer or banker, it’s good to get in touch with them at least once a year and sometimes even more.”
Plan for the long term
“It’s always the short term that can be scary. And that’s what people see,” he said. Novack advises business owners to look long term if possible. “I have been in banking for 20 years and have seen interest rates rise and fall on a number of occasions. People are understandably focused on interest rates since borrowing is more expensive for everyone, but historically interest rates are likely to come back down at some point. The economy is cyclical and while nobody can predict interest rates, you have options,” he said.
Novack also advises companies to continue making necessary investments. “When a person has a business need, e.g. For example, if a bigger building is needed for the expansion, I recommend her to keep looking and if she finds the right building that works for her and she can afford to buy it. Just because they’re paying more for loans now doesn’t mean they can’t refinance when interest rates fall and the economy is better in the future. Getting into something now, like a new building or project, can bring them long-term benefits,” he said.
Novack encourages companies to regularly check in with their banker. “It’s an excellent time to sit down with your banker and talk about your business, as this conversation can uncover options or strategies that the business owner didn’t know were available,” he said.
Patrick Novack is VP, Relationship Manager at Coastal Community Bank. Contact Patrick or a lender at one of Coastal’s 14 local offices for more information. www.coastalbank.com Member of the FDIC. Equal Housing Lender.
— Sponsored by Coastal Community Bank
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