With looming tariffs and varying interest rates affecting Montgomery business operations in 2025, now is the time to take a proactive approach to capital planning. Whether your company is looking to expand or maintain its operations, financial preparedness is key to staying competitive and adaptable.
Capital fuels innovation, growth and long-term success. Without proper planning, businesses risk falling behind competitors. These four steps can help develop a more strategic approach to capital planning.
STEP 1: ASSESS YOUR CAPITAL NEEDS
Understanding your company’s financial needs is the foundation of strategic capital planning. This assessment should include growth objectives, economic impacts and workforce considerations. In addition, trade associations can provide valuable insights to help businesses stay ahead of economic shifts. Workforce planning is also essential, particularly in industries requiring skilled labor.
STEP 2: ORGANIZE CAPITAL STRUCTURE
Striking the right balance between debt and equity ensures financial flexibility while keeping costs manageable. Companies that fail to secure financing early may struggle to act quickly on growth opportunities or unexpected challenges.
I’m currently working with a commercial construction company to restructure existing debt tied to large equipment. By understanding its current operations and growth goals for 2025, we laid out a plan to reduce the cost of debt with an equipment term loan, reallocate cash flow and implement solutions to optimize cash management. Working with internal banking partners such as Valley Equipment Finance and Valley Treasury Solutions, my client can focus on existing projects, bid on new opportunities and improve their market position.
STEP 3: ALIGN CAPITAL WITH STRATEGY
A great example is succession planning in a family-owned business. In Alabama, many businesses are family-owned, making succession planning critical. As leadership transitions to the next generation, evaluating financial health and capital needs becomes essential.
A solid plan helps ensure a seamless transition while also considering personal financial planning for retiring owners.
STEP 4: STRENGTHEN BANKING RELATIONSHIPS
Capital planning extends beyond securing financing—it involves leveraging banking relationships for strategic guidance.
Bankers offer industry-specific insights and financial solutions, including Treasury Management, liquidity services and risk mitigation strategies. Having a strong banking partner allows companies to model different financial scenarios, helping them prepare for rising interest rates, unexpected expenses and economic shifts.
A well-executed capital plan ensures financial flexibility and aligns business priorities with available resources. Partnering with your banker helps manage risk, optimize debt-to-equity ratios and position your company for long-term success.
About the Expert: Louis Franklin, Jr.
Louis Franklin, Jr. is VP, Commercial Banking at Valley Bank and has been in the industry for over 12 years.
(334) 270-3033 | [email protected]
