What your banker wishes you knew heading into 2024: Three steps to avoid pitfalls and uncover business opportunities

Greg Martinez-Miller is the commercial banking leader for Wells Fargo in the Inland Empire. Valley News/Courtesy photo

Greg Martinez-Miller

Wells Fargo

In my 16 years as a commercial banker in California, there is an evergreen business opportunity that quickens my pulse and unleashes my inner optimist: the outlook for the new year. And 2024 is no different.

Sure, interest rates are at the highest since 2000. Global conflict is on the rise. Artificial intelligence feels like a bit of a wild card. None of that is within our control. But as business leaders in the Inland Empire, we can dictate how we prepare to take advantage of new opportunities in the year ahead. And I have three simple axioms to help you do that. But first, let’s step back to hear what business leaders nationwide are thinking.

Recently, PwC released their Pulse Survey Results indicating that U.S. business owners express more optimism about the economy than a year ago and recession concerns have dropped by 18% since last October. Leaders, however, continue to reference concerns about rising costs, managing labor and resources, reducing risk and improving efficiencies.

These concerns merit attention, but from a banker’s perspective, 2024 could be the chance to develop a business plan that withstands economic headwinds. Incorporating these three steps into your business plan can help better position your business for growth.

Don’t get sidetracked.

Identify what you can control, and what you can’t.

Too often, business owners bank on luck and pluck. They believe they can beat the market. That they can wait out the interest rate environment. Or that if they are strategic enough, it won’t apply to them. Unfortunately, these predilections, while understandable, are often fruitless and always a distraction. With current macroeconomic, political, and social conditions, there are many distractions.

These factors, however, are outside of individual control. While it is important to be aware of the environment, it is even more important to avoid allowing it to distract from your focus. By acknowledging the external impacts relevant to your business operations while focusing on product and practices, business owners can favorably position themselves by shifting their mindset to one of adaptability rather than one of playing defense.

Through focusing on the business at hand, providing quality products and services, improving the balance sheet and increasing efficiency, business owners may be better positioned to address the needs of their companies rather than staying in a constant reactionary mode.

Don’t delay action.

Engage in the present.

Growth, advancement and progression are all results of action. And, after the pandemic-induced business hiatus, now is the time to take action.

While every business leader wants to maintain and execute their own plan and strategy, companies are better served when their management team is surrounded by trusted advisors.

Businesses should seek input from their accountants, bankers, attorneys and other trusted advisers to ensure decisions are made with the greatest consideration. These advisers can also help business owners identify yellow flags and their potential implications.

In recent years, low interest rates and excess liquidity have made it easy to ignore inefficiencies or balance sheet deviations. Businesses should consider taking decisive action to address any area that could be a risk to their capital, productivity or efficiency. The cost of doing business has increased and an income statement should not be considered the only indicator of a company’s health.

As companies position themselves to weather economic volatility, it is important that they regularly stress test possible outcomes and scenarios to ensure the viability of their business. According to PwC nearly 50% of those surveyed cite the possibility of a reduced demand for goods or services as a top concern. Through regular stress testing businesses can address different scenarios in such a way that will allow for planning and action.

Inaction in today’s environment is potentially detrimental. Act now to make the most of your company’s potential.

Don’t ignore opportunity.

Blue skies are ahead.

For businesses heading into 2024, the opportunities to improve efficiencies and favorably position themselves will be considerable, especially through digitization, cash flow and capital deployment to grow the business. Here are some immediate fiscal management considerations: Digitize – Make choices that allow for the best allocation of resources and digitizing your cash flow management and payments process which may allow you to put those people hours to growing your business; Improve Cash Flow – Strategically timing when money is going out and coming in can make a difference not only to your cash flow, but to potential interest earnings and Pounce on Growth – Companies that have been strategic and carefully maintained their balance sheets may reap the benefits with opportunities for acquisitions and growth.

In conclusion, seize the day.

As 2024 approaches, business owners have the chance to not only conduct business, but to excel. During a time of economic uncertainty, this next year is certain to be pivotal for many businesses. That can feel daunting, but those who stay focused, proactive and analytical can stack the odds in their favor.

Greg Martinez-Miller is the commercial banking leader for Wells Fargo in the Inland Empire. Based in Ontario, Martinez-Miller leads a team of commercial relationship managers in Riverside and San Bernardino focused on middle market and mid-corporate companies, both privately held and publicly traded, across a wide variety of industries. He has been helping middle market companies in California succeed financially for more than 16 years. Contact him at Gregory.Martinezmiller@wellsfargo.com.

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