1. As a business coach I recommend 3% Automatic Savings and Capital Reserve Funding – With my photography company, we take 3% of all sales revenue and put it into a reserve bank account. We have set this up to happen automatically so that it is never an emotional decision to save or not save. This is not even something we discuss. We just do it. Because we made the decision one time to automatically save 3% of our gross revenue into a capital reserve fund, we have effectively decided to never have an emergency again. We are never in a cash crunch when bad things happen or when we need to fund our growth.
2. Reduce the Time Involved in Your Sales Cycle – Systemically reducing the amount of time involved in your average sales cycle will help you tremendously for almost countless reasons. The momentum in your office is unbelievable when deals close fast. The morale in your office increases dramatically when the members of your team see that deals are closing quickly. The energy and the emotional state of your average employee are peaked when deals are closing all day left and right…BOOM.
For an in-depth training about how to dramatically decrease the length of your average sales cycle, visit: www.Thrive15.com/how-to-reduce-the-average-length-of-your-sales-cycle
3. Receivables-Based Financing – Raising money with receivables-based financing is expensive, but if it is your only route to financing, then you need to consider it. Essentially, a company like SwiftCapital.com will purchase your receivables at a discounted rate and will give you the cash you need today. They set up fixed payments from your business checking account that they deduct each week until all of the receivables purchased have been paid back. The rate of interest that these companies charge can be very high so make sure that you know what you are getting yourself into before moving forward with companies like Kabbage.com, SwiftCapital.com, and CanCapital.com.
4. Investors / Dancing with Potentially Key Partners or the Devil – I have tried to not reference Satan, the Devil or the Anti-Christ in this book thus far, but now it is time. Whenever you take on an investor, you must realize that you are taking on a partner who is going to want to give you advice, good or bad, for the long haul. Occasionally, as a business coach, I will speak with a young man who is upset that his father-in-law is constantly judging him and telling him what to do after he let his father-in-law buy him a house or pay for his vacation. My friend, taking on an investor definitely involves you taking on their influence, their feedback and their world-view, good or bad.
As a general rule, as a business coach, I have found that the local banks that you deposit your money with each and every week will be willing to invest in your business if you are operating at a 30% operating profit margin, if you have been a faithful and good customer with them, if you have a good credit score and if your loan package is Small Business Administration Loan compliant (SBA compliant). When banks lend money to a startup, it is very risky if you do not have enough collateral (stuff that the bank can take back if you don’t pay the loan off). However, if the bank can secure for you an SBA Loan, the deal becomes less risky because the Federal Government is actually going to guarantee approximately 85% of the value of your loan.
For an in-depth training from the business coach on how to secure a small business loan from your local bank, visit: www.Thrive15.com/how-to-secure-a-small-business-loan-from-your-local-bank
When attempting to secure a small business loan, you need to be super aggressive when it comes to preparing a bankable packet before you ask a bank to lend you money. You only have one shot to make a first impression and it is absolutely critical that you knock your initial presentation to the bank out of the park.
For an interactive and updatable worksheet, from the business coach, to help you create an accurate and up-to-date Balance Sheet, visit: www.Thrive15.com/how-to-create-an-accurate-up-to-date-balance-sheet
For an interactive and updatable worksheet to help you create an accurate and up-to-date Profit and Loss Statement, visit: www.Thrive15.com/how-to-create-an-accurate-and-up-to-date-profit-and-loss-statement
Download a Small Business Loan Documents Checklist at: www.Thrive15.com/small-business-loan-document-checklist
Once you have your documents together, you must then commit to pitching to a minimum of 10 banks so that you will have multiple lending options to choose from. A wise business owner (and by now, you are one) will create an atmosphere where banks are competing with each other to lend you money. The better your loan packet, the more banks will want your deal. I do not know of a single small business owner who has not had to pitch his loan packet to at least several banks before getting the loan he needed.
When seeking a small business loan, you must keep these three key principles in mind:
1. Banks make money by lending money. They are not doing you a favor by lending you money. In fact, banks actually lose money (as crazy as it sounds) when they just take in deposits all day because they pay their customers interest on the money they deposit.
“Robert Hemphill was the credit manager of the Federal Reserve Bank in Atlanta. In the foreword to a book by Irving Fisher entitled 100% Money, Hemphill said this: If all the bank loans were paid, no one could have a bank deposit, and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash, or credit. If the banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless situation is almost incredible—but there it is.”
– G. Edward Griffin
(An American author, lecturer, and filmmaker. He is the author of The Creature from Jekyll Island)
2. Banks are just like any other business in that sometimes things are going well and sometimes they are not. Sometimes a bank cannot lend you money because they are struggling to meet their liquidity requirements and not because you have a bad pitch or a bad loan package.
“I knew that if I failed I wouldn’t regret it, but I knew the one thing I might regret is not trying.”
(Founder of Amazon)
“Don’t be afraid to assert yourself, have confidence in your abilities and don’t let the bastards get you down.”
(The founder and owner of Bloomberg L.P. and the former mayor of New York City who is worth approximately $44.7 billion dollars)