Friday, July 25, 2014

Blog Talk Radio Interview: The Funding Is Out There!




Join me for an interview / discussion of my new book, The Funding Is Out There! Access the Cash You Need to Impact Your Business, on the Hollis Chapman Show!

http://blogtalkradio.com/hollischapmanshow

Friday, July 25, at 1:00 pm EST 
  • 12 noon CST
  • 10 am PST


Get answers to questions such as:
  • How does a new company get funds?
  • Options for each stage of growth.
  • How has passion helped you get over the rough spots?
  • Small and medium businesses are unaware of the variety of financing sources.But there are so many hoops to jump through! Expound on this.
  • Learn how to lay the financial framework to create a viable, sustainable business to sell or pass on! Could you share some tips with us?
  • Advice to optimize your banking relationships.
  • What does Tiffany C. Wright think can help business owners most, financially?
http://blogtalkradio.com/hollischapmanshow




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Tuesday, July 15, 2014

Small Startup Shows Uncommon Partner Relationship Building Approach


Photos of the messages sent to Xero by TimeCamp.
Press release: A small startup, based in Poland, shows an uncommon approach to building relationships with business partners.

From the end of June, companies that use Xero for accounting can also monitor time and attendance of their employees thanks to the integration with TimeCamp, an automatic time tracking software application. Connection of these two tools provided an opportunity to try a more human approach to marketing.

TimeCamp typically opts out of the use of classical marketing and markets to highlight the benefits of using its time tracking software. TimeCamp prefers to rely on people, emotions and true Human-to-Human relations, eschewing the term business-to-business. In other words, H2H instead of B2B.

H2H is a new way of thinking about marketing. Its creator, Bryan Kramer uses the simplest words to describe this idea, “Businesses do not have emotions. People do.”

According to Bryan, for customers (and also for business partners) what is most valuable is “an undying relationship with a person or people at your brand who make them feel uniquely special.”

This belief is the reason for TimeCamp’s action. On Thursday, July 3, 2014, 120 employees of Xero received emails with pictures presenting TimeCamp’s team members holding boards emblazoned with personalized greetings to their new partners.

“It took us a lot of time and effort to take pictures and address them to each Xero worker. We didn’t earn a penny on this, but that was not our aim. We are very happy we did it. Nowadays, building friendly relations with business partners and clients is generally just an empty phrase,” says Dawid Jurand Szkielka, COO at TimeCamp. Dawid continues, “People still talk about the importance of human relations, but they keep communicating information regarding their products or services in such inhuman, materialistic ways. We literally want to be Xero’s mates, because together we create an excellent software integrated application that helps people run their business - and we believe this is provides significant value, not only in marketing but also in someone's life.”  

Click here to read and watch what Xero and TimeCamp campaign's looked like:


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Wednesday, July 2, 2014

Investor Perspective on Small Business Financing

Show me the money! That's what you're thinking when you pursue investors for your business, right? "Step up and put your money where your mouth is." or "Put up or shut up." is what you secretly say in your mind when thinking about investors. Admit it.

When seeking funding from an investor, it's very important for you to see your business and its potential from the investor's perspective, essentially stepping into the investor's shoes. Why is this important? Taking the investor's perspective will help you really think of your business as a valuable asset separate from yourself and help you anticipate the questions and concerns an investor may have. Finally, this perspective can help you better prepare and package your company and, consequently, pull in more investment dollars.

 If you cannot return the money to me on a yearly basis and have no intention and strategy to get the company to a sale point in a few years where I could make multiples on my investment, then why would I invest. It's the same "what's in it for me" perspective that businesses must think of when crafting marketing material for prospective customers. An investor needs to know what she'll get out of it.


Your perspective changes depending on where you look from.
What do I mean by "small business financing from the other perspective"? This blog is dedicated to helping small business owners understand financing options and how to access those options as a vehicle to grow and strengthen your business. So "the other perspective" refers to those who would provide you or your business with financing. I think it's important to have a good grasp of what motivates those who may be interested in lending or investing in your business. With this knowledge you can target appropriately or, if rejected, adjust who you go after and what you provide them with, without taking the rejection personal.

Lenders and investors are very different, therefore I will discuss them separately. Look at past and future articles for more specifics regarding particular financing sources (i.e., differences between banks, commercial lenders, accounts receivable financing firms, merchant lenders, and more on the lending side and differences between angel investors, venture capitalists, strategic investors, private equity investors on the investing side).

Key for Lenders

What's key to seeking financing from lenders of all types are the following:
  1. Cash flow to support the pay back of the loan;
  2. Collateral for the lender to take if your company defaults; or
  3. Combination of the two.
In general, for lenders, the more cash your company generates and the longer the history of generating this cash, the lower the need for collateral. Think about it. If you were lending out $100,000 to a company for four years, what would make you feel reasonably comfortable that you would get your money back? A company that generated cash flow of $5,000 per month and so could easily cover the $2,500 monthly payment (I'm keeping it simple here!)? Or a company that had no idea what's its cash flow was? What about a company that barely generates $2,600 per month in cash but that provides you a two-page summary of how the funds you've loaned them will help them increase that cash flow to $6,000 per month over three years? Be honest.

What would make you comfortable lending?

Thoughts on Cash Flow

There are options for you, no matter your situation but you must be very clear on what you need, what you need the money for, and what financial position your company is in. Many small business owners confuse cash flow with net income. They are NOT the same. You can provide an income statement that shows that your company makes $5,000 in net income per month. But, if you created a cash flow statement, which the majority of small business owners do not, you would see that the cash flow may be negative.

This is why lenders typically ask for your aging - account receivables aging and account payables aging. They analyze how long it takes your customers to pay you and how long it takes you to pay your vendors and suppliers and compare it to your income statement to determine if your company has strong, positive cash flow or is really struggling. If you were lending to a company, wouldn’t you want to understand how that company would repay you? And wouldn’t you want to be sure that those were not empty promises but actually backed by cold, hard facts?



Thoughts on Collateral

Perhaps your company has high quality collateral, or needs funds to buy or lease high quality collateral. This is where asset-based lenders like equipment lenders or accounts receivable lenders come in. These companies often specialize in particular industries and understand that cash flow may be tight yet they believe in the quality of the collateral. This is not blind faith, mind you, but a receptiveness based on years of experience lending in certain industries against certain assets. Again, put yourself in the lenders' shoes.

Let's say someone in the construction industry approached you to purchase dump trucks and hydraulic lifts and you had significant knowledge of the construction industry. This knowledge includes the types of companies - financial strength, customer list, bonding capacity, etc. - that successfully repaid their equipment loans. Wouldn't you feel more comfortable lending to that company, as long as it met certain thresholds? Now what if a distribution company approached you to buy those same hydraulic lifts? How comfortable would you now feel?

Take This Perspective

If you do this analysis yourself (or, more likely, hire someone to do it), you can identify and find a lender that's a good fit for your situation. This process of putting yourself in the lender’s shoes will also help you identify areas for improvement so you can eventually expand your financing options.

In the next article I'll discuss investors.

http://theresourcefulceo.com/landing
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