Hardware Retailing

APR 2011

Hardware Retailing magazine is the pre-eminent how-to management magazine for small business owners and managers in the home improvement retailing industry.

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By Jaime Koch, jkoch@nrha.org, @NRHA_Jaime Show Me the W alter Toole, owner of six hardware stores in central Florida, still remembers the name of the banker who denied his request for a loan to open his second store over 20 years ago. DESPITE TOOLE'S LONG-TERM, LOYAL RELATIONSHIP with the bank, Valerie wasn't willing to budge on her lending decision. This experience with a larger bank led Toole to a local lender and more creative ways to fund his business expansion. While times have changed, today retailers are facing more and more lenders like Valerie who are unwilling to provide credit or financing to a small business. In addition, each year the amount of capital required to operate a profitable retail hardware store increases. Toole explains how 20 years ago, he needed around $50,000 and a bucket of sweat equity in order to open his first store. Today, he says he would estimate the cost as several multiples of that. "With the money market exceptionally tight, it does make it very difficult to open a store or remodel," says Toole. "I would imagine you need at least 20-percent liquid to even have a chance of putting it together." Whether a retailer needs cash flow to fund addi- tional inventory lines and new equipment or he's interested in expanding, remodeling or adding an entirely new location, raising capital is a challenge for entrepreneurs in any retail sector. In the following article, we'll help you become more familiar with the process of raising capital, get better prepared for the loan process and provide some tips for brushing up on your negotiation skills. With the help of some of the most successful retailers in the country, the Small Business Association (SBA), and the guidance of a veteran bank office lender, we'll help you get the financing you need. Financial Advising for this Story Came from the Following: United States Small Business Administration (SBA): an independent agency of the government aimed at supporting small businesses. www.SBA.gov 30 Hardware Retailing Walter Toole: Owner of Bray Ace Hardware, with six locations in central Florida, past NRHA board president and financial guru. T.J. Comstock: Owner of Billings Hardware with three locations in Montana, finance degree from University of Montana, secured loans across several sectors. Mark Boswell: Assistant vice president of commercial lending at Hendricks County Bank & Trust Co., in Avon, Ind., active in the community banking industry for over 26 years. www.nrha.org The Secrets to Raising Capital in Today's Lending Market April 2011 FINANCIALSTRATEGIES

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