How to Launch Your Venture with 0% Funding & Profit by Helping Others with Leo Kanell: An EOFire Classic from 2021

0:01Light that spark fire nation JLD here and welcome to entrepreneurs on fire brought to you by the HubSpot Podcast Network, the ideal destination for business professionals like No Straight Path. Today, we're pulling a classic episode from the archives, and we'll be breaking down how to launch your venture with 0 % funding and profit by helping others. To drop these value bonds, we are about to Leo Cannell and the EO Fire Studios. Leo and his team have secured funding for thousands of entrepreneurs for hundreds of millions of dollars. He's a founder of Seven Figures Funding and authored the business funding formula.

0:32In today's foundation, we'll talk about mentoring and coaching and how it helps business owners so much, how a mixture of different financing types on your personal credit will be pivotal and qualifying for a 0 % interest rate, and so much more. And a big thank you for sponsoring today's episode goes to Leo and our sponsors. Marketing Made Simple, hosted by my friend, Dr. JJ Peterson, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Marketing Made Simple brings you practical tips to make your marketing easy, and more importantly, make it work.

1:02A recent episode all about how Liquid IV is using marketing to shake up the beverage world, dives deep into the strategies that have propelled Liquid IV to remarkable success, a must listen. Listen to Marketing Makes Simple wherever you get your podcasts. Leo, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. What's going on, JLD? Super excited to connect with Fire Nation today. You know, I think a common theme and thought that a lot of people think is that debt is wrong, that you need to avoid debt at all costs. And especially if you've ever gone on YouTube and you've seen Mark Cuban has a video where he says, anybody who starts a business with a loan is a moron, is what Mark Cuban says.

1:48And yet Under Armour's Kevin Plank launched Under Armour with$40 ,000 in credit cards. Now he had a little bit of savings, but without that 40 ,000 in credit cards. Multi-billion dollar company Under Armour does not exist. Starbucks was also launched with a loan and Nike's Phil Knight before Nike went public almost went bankrupt a number of times if it weren't for the ingenuity and what I call the funding formula that great entrepreneurs follow. And he got those loans over and over again to keep Nike afloat. Even Google needed some creative financing long before they got venture capital financing in order to launch.

2:30And frankly, all three of my successful businesses each launched with some debt. So I think that's a misperception that is certainly debt for personal reasons doesn't ever make you money going and maxing out that credit card to go on vacation or to buy clothes or furnishings. That doesn't make you money. But business and debt is completely different. and I think that's a big misconception. And that's what we're gonna be talking about here today. Fire Nation is business and debt. Again, not going into debt with your vacation or with a wedding or with one of those other life purchases that are going to potentially have a big return for you down that line.

3:10And as I mentioned in the introduction, we're talking all about how to launch your venture, Fire Nation, with 0 % funding and profit by helping others with funding. I mean, this is going to be a whole conversation around this. And let's just start with the obvious question, Leo, which is the difficulty in obtaining funding for a new business. How difficult is it? You know, it is extremely difficult to obtain funding for a new business. And really, ever since the recession of 08 and 09, it's just unfortunately gotten that much more difficult. And one of the other misperceptions out there is, well, I think I can just go get some venture capital, right?

3:50Or maybe I can just list something on crowdfunding like what you did successfully and get some funding and financing to get started that way. And that certainly can work. But unfortunately, the statistics show it only works for about 5 % of new businesses. Venture capital and crowdfunding make up 5 % or less of the funding new businesses get. And so then the next thought is, well, hey, you know what? I banked at my local bank for a number of years. I've got my money there. They're going to help me, right? So I'm going to go to my local bank. And that's what I did when I was trying to start my first business and went to the local bank.

4:25And they're like, no, do you have business financials? Do you have assets and free and clear property that we can take as collateral? And for most new entrepreneurs, that's just not doable. And so SBA and business loans at your bank make up another 5%. So we're talking about 90 % of new business owners. How do they get the financing and the funding to be able to launch the products and services that change and improve our lives? And reality is it's very difficult. It's very challenging for them to do that. And so that's where I felt this mission, this call to how can I figure out how to get my own business funding?

5:02And then once I was able to figure that out, then I started to help friends and family and one thing led to another. And it's been just so satisfying to be able to help entrepreneurs get the products and services. But if you don't know until you try, and then all of a sudden you're like, dang, reality is tough, it's much more difficult than I thought. Well, let's talk fundable. I like that word, fundable. So how can we make our businesses fundable? How can we make our businesses look appealing for other people to actually help us fund our own businesses? You know, that's a great question. And it breaks down into a few factors.

5:39One factor is they want to see that your business looks legitimate. It's much more than having that business plan. It's having that business website. It's having the business in good standing and active with your state commerce department. It's having everything match up a separate business phone number, a business email, not a Gmail email, but an actual yourbusiness.com type email. So once you have those foundational pieces, that's part of the puzzle. But then the other part, especially for a new business, is until you get your business up to$50,$100 million a year, which takes a lot of work, it goes off of personal credit.

6:20Because it's kind of like when you're 18 and you go out to get a car loan and they're like, well, you don't have any credit history. We're going to need mom and dad to co-sign. And so in order for your business, your brand new business that doesn't have financials to get some financing, we need to take a look at your history of personal credit. And if we can see some good things on your personal credit, then we could be comfortable extending some financing and funding that way. So personal credit is very important. And if you are starting a new business, it's actually really important to keep that day job, that W-2 job, because that proven verifiable income of W-2 job is going to help you qualify for additional financing and funding options.

7:01So that's super important. And then the other thing you want to think about is what lazy assets do I have sitting around? Sometimes we do have a car that's paid off free and clear that we can use as collateral to get some financing and be fundable. So that's kind of the startup. Then we start looking, okay, now I got some initial funding. I'm seeing success, proof of concept, generating some sales. Okay, good. Now, how well do you take care of your business bank statements, right? Do you keep a decent balance in there? Do you keep that business bank account from going negative? Don't put it in the negative.

7:35Don't bounce checks, right? If you can do those things and build a strong business bank account history, that's going to help. And then the next step is down the road. If you are trying to qualify for that big SBA loan, then that's where you have to strategically get with your account and say, all right, we maybe can't be quite as aggressive with all of our write-offs this year. We're going to need to show more profits on the tax return. And once you understand and get with your CPA or accountant on that, then you can qualify for even bigger loans into the future. A lot of things I want to go back over right here, Fire Nation.

8:07Number one, does your business look legit? Do you have a website? Are you working with an actual email address that isn't again, john at gmail.com, but john at entrepreneurs on fire.com? Do you have a job that's actually bringing in money? That's a good thing. They'll look very highly upon that because you have money coming in. What potential lazy assets do you have laying around like maybe a paid off car, maybe some real estate, some other things that could be collateral. And then hey, It's great to minimize taxes, but sometimes there are ways to be strategic where you're not going to minimize everything down to the bone.

8:45You're going to show some actual profits. So people are like, whoa, this company is actually generating significant revenue. They are making a significant profit. We can loan against that. And then SBA loans become more possible, et cetera. Now you've created, Leo, a funding formula that so many successful entrepreneurs have followed, thousands in fact. Break down that formula for us. Absolutely, GLD. So this funding formula was something that I was studying and researching and really trying to grow our funding options and marketplace. I wondered, in history with some of the great entrepreneurs, is there kind of been a formula that they followed?

9:24And one of the guys I started with actually in my research was Sam Walton and Walmart in his book, Made in America, an amazing book. If you haven't read it, I definitely recommend it. But Sam Walton established these unique relationships. He built his business credit. And as he was doing that, he was able to get financing over and over through the years, again, for a long time, for decades, way before he went public. And then once he went public, had plenty of financing options. So this funding formula is it starts with the foundation. It starts with that personal credit, right? Building that good personal credit score.

10:02And it's more than just making those payments on time. It's having a mixture of loans, lines of credit, car loans and mortgages. So you start with that personal credit foundation. And then the next thing you want to do is you want to build relationships with lenders and funding sources because relationships are what matter. And so when Phil Knight was growing Nike, that was part of the funding formula. He had to have these relationships. And he would literally fly several states away because he had gone through all of the local banks and the banks there in Oregon and found as many options as he could.

10:38Then he'd go to California. He'd go to Missouri, of all places, and build these relationships with additional lenders. And once you build that relationship and that trust and you have good payment history and you use that line of credit, pay it down, then they'll extend more credit. And then the funny thing about it, it's kind of like in the NFL where they say it's a copycat league and people copy plays. Well, the same thing happens if I'm a lender, I'm competing against another lender and I see, oh, OK, you know, American Express gave you$25 ,000. Well, I can trust you with$25 ,000 as well. And then it starts to become, you know, part of this formula is building these relationships and then going after you build it with one, building that relationship with additional lenders and then understanding all the options on the funding marketplace.

11:25Right. Everybody wants to know that the grass isn't greener, that if they go to a funding company, that am I really getting what's the best funding for me and that I qualify for? And so as an entrepreneur, you can try and keep your finger on the pulse of that funding environment, but you're probably pretty busy running your business. And so that's where if you can have a funding advocate who does that hard work, who has their fingers on the pulse, who's always helping thousands of entrepreneurs to get the financing they need to create their dream business, then that's very helpful to have a funding advocate on your side to kind of manage that.

11:59So Fire Nation, there's just a lot of gems within what Leo just shared. Number one, you brought up Phil Knight for a second time. I mean, the book Shoe Dog, Fire Nation, it's such an enjoyable read. I'm literally actually going to download it from my Audible today now because I just haven't listened to it probably in five years. And just going through that book, man, it is just so inspiring. And it's going through a lot of things that Leo's talking about here. So I highly, highly recommend that. And something else that Leo shared that I had to write down was Momentum Begets Momentum. And it's so true in everything in life.

12:33When I got Gary Vaynerchuk and Tim Ferriss to say yes to be on my podcast, who was going to say no at that point? I had momentum on my side. Just like when American Express gives you a loan, hey, there's other people that are going to be like, oh, well, if they're qualifying this person, they've probably done all the hard work. Let's make that happen. Just like I used to always think about how it'd be like, wow, there's Home Depot right here. Why does Lowe's always open up a shop right next to Home Depot? is because Lowe's knew that Home Depot did all the hard work, that like this was a busy enough intersection, there was enough people.

13:06And now Lowe's is like, we're just going to come in and be better. We're just going to come in and be a better store. And so momentum begets momentum, Fire Nation. And then remember, understand all your options. There are a lot of options. You need to understand all of them because every situation is different. Every opportunity might be the right one for you or different opportunities might be the right opportunity for you because you're unique, you're different. You have a unique, special situation. Now, we're gonna talk about qualifying for funding at 0%. We're gonna talk about how to get a free pre-approval to actually see what your options are before you even take a step by your nation and so much more when we get back from thanking our sponsors.

13:51Things change fast in the online business space and when you have a team to manage and a business to run, it can be tough to keep up with all the latest and greatest marketing trends. That's why HubSpot created the 2024 State of Marketing Report to pull together the top marketing trends that you need to perfect your marketing strategy this year. The report consists of input from more than 1 ,400 marketing pros from all across the world. That's a lot of marketers. But don't worry. HubSpot pulled out the top trends shaping marketing this year and beyond and packaged it all up just for you. Awareness, engagement, privacy, efficiency, growth.

14:25This report has all the top areas of interest for marketers and shows you what's working and what isn't so you can stay ahead of the curve. Do yourself a favor and check out this report. It's exactly what your team has been looking for. Visit HubSpot.com slash State of Marketing to get your free copy of the 2024 State of Marketing Report for all the trends shaping marketing this year. Leo, we're back. And before the break, I was teasing the opportunity, the possibility of qualifying for funding at zero percent. Is that even possible? You know what, JLD, we are so fortunate to live in the country that we do in the U.S.

15:03where that is an option because there are all these different funding sources that to build that relationship with you will offer a zero percent interest rate for some initial financing and funding. and it actually is possible. And so for your business to qualify for some 0 % credit lines to get launched, to get off the ground, which how great is that? You know, you've got 0 % interest for up to 15, even in some cases up to 20 months before you even have to worry about interest. And in order to qualify for that, again, we start with the foundation. That business needs to be in compliance. And what that means is everything needs to match up, right?

15:40If I go look up your business on the online listings with Google and with some of the online listing services, does that address match up with your business entity with the state website? And does it match up with the business license? Does it match up with the phone number that's listed? And again, do I see an actual website? Do I see an email address on the listings that goes back to your business website? And so once we have that foundation, we've confirmed the business is in compliance. Well, again, now we want to start to look at the personal credit history, right? Especially if you're a new business, then that personal credit is very important.

16:17And so you want to have strong personal credit, payments are made on time. And then a big secret, a big tip that a lot of people don't know is your credit cards, right? If your credit cards are all maxed out and then you're going and looking for additional financing, then it's kind of like, wow, you're one missed paycheck from defaulting on everything that makes you high risk. You're going to get declined. So if you can have your credit card balances paid down below half of the limits, then that's going to increase your odds and success of getting financing and funding. And sometimes we don't have that money just sitting around to pay those down.

16:52We already use the credit cards to kind of launch the business. And that's where we'll help you out by getting you, you know, a three, five year loan that you can use to pay down some of those balances, raise your credit score by 40 or 50 points and then actually be able to qualify for that 0 % money. And the other factor that they'll look at is if you can have a mixture of credit, right? Yes, you've got credit card history. The student loans don't really help or hurt, but they also want to see some mortgage history, some auto loan history. So if we can see a mixture of different financing types on your personal credit, then that's going to be really pivotal in qualifying for that 0 % money.

17:31Fire Nation, there's a lot of things I really want you to understand where it comes to your actual opportunities here when you want to actually potentially start with funding at 0 % for an extended period of time to give you that runway, to give you that breathing room to actually make things happen. But as I kind of mentioned also before the break, Leo, I'm all about getting all the intel before committing. So talk to us about how somebody can get a free pre-approval to see what all of our options are before we actually sign anything or take any serious irrevocable steps. Absolutely, JLD. And you know what?

18:08One of the biggest concerns that we all have is, okay, I'm getting pre-approved. I'm getting qualified for funding. Is this going to hurt my credit? aka there's going to be a hard credit pull, a hard ding to my credit just to find out what my options are. And if you go to your local bank, unfortunately, the answer is yes, there is going to be a hard inquiry. It is going to have a negative impact on your credit. So what we've done is we established a relationship with Experian, the largest of the three credit bureaus, and you can actually get a no impact pre-approval from our funding company. That's not going to have any impact on your credit.

18:46It's what's called a soft credit pull. And that allows us to, you know, run your information and compare it in our automated underwriting system with the thousands of people we've helped and generate a pre-approval based on your credit. If you have verifiable income with that job that you still may have, hopefully, then we're going to look at options with that. If you've got the sales going through the business bank account, we'll look at those options. And if you're one of the few that has those business tax returns showing some profits, then we'll definitely look at those options as well. And so it's very simple.

19:18It's very easy. With our relationship with Experian, you actually don't even need to put your social security number on the form, which is nice. They've got the database so accurate now that based off of your contact information and residential address, we can actually get that free pre-approval. And what we did was we wanted to make it as easy as possible so that you can remember the website URL. but we created a website URL just for Fire Nation. It's sevenfigures.com. That's the digit sevenfigures.com forward slash fire. And at that site there, you'll be able to click on that link, get a free pre-approval, schedule an appointment with a funding team member, and just find out, all right, what are all my options on the funding marketplace?

20:02And our job is to present all of the options and then you're in the driver's seat to decide what's going to work best for you. So there's a lot of things here at Fire Nation. Number one, that soft credit pull, the no impact on your credit. It's basically a risk-free way to just be like, okay, where do I stand? What are my actual options? And of course, sevenfigures.com slash fire, the number seven, sevenfigures.com slash fire. That's where you can head over to learn a lot more about what Leo's talking about here. But before we do let you go, I do have another question because there's a lot of business coaches, Leo, within Fire Nation here.

20:37So how can the addition of funding increase a business coach's sales? You know what? That's such a powerful question. And our entire business model really is predicated on helping business coaches and business consultants to kind of remove that big obstacle of, oh, you know what? I'd really like to invest in your business coaching, but I'm low on funds, right? Well, guess what? when you can provide financing and funding options at a 0 % interest rate so that you can help more people actually be able to invest in coaching and consulting. We know mentoring and coaching helps a business owner so much to have that success and then not only, you know, pay for that coaching, but have additional money and lines of credit available to implement the growth.

21:22I might have the money to pay for your coaching, but if I don't actually have the additional money to implement the growth strategies, to do that Facebook marketing campaign, to hire that additional salesperson to buy that inventory, then your coaching may not help quite as much. And so that's where when you can offer funding and financing and do in a way that doesn't take much of your time, we've created a software that creates a custom funding link for you to be able to put on your website, email, text out, and basically just connect them right up to our sales team. You don't have to do any of the work.

21:53And yet you get tracking with our software where you know, okay, the client just received funding. And we're going to act as a second sales team for you to help the client understand all the benefits of the funding and financing and how it can work together, working with you and your coaching as an example of how powerful it can be. I know you had Pedro Adeo on your podcast recently, and he's an amazing guy. And we've been fortunate to provide funding for a lot of his clients, but also one of his top students, Steven, we started working with a little over a year ago. and ever since he started working with us, he went from having six-figure challenge launches to seven-figure challenge launches because we've been fortunate to provide funding for hundreds of his clients who now have the money and the confidence to launch that business and learn from the coaching and the training and the mentoring.

22:45And so that's how powerful it can be. It can literally take your business from six to seven figures overnight. This is really powerful stuff, Fire Nation, because now you are literally adding to your team as a business coach, an entire additional team that's going to be able to help you help your clients get the funding that they need so they can afford your services, so they can invest in your services, so that you can then invest in them and create amazing results for them. So Leo, you've shared a ton of great value all day today. What is the one thing you really want to make sure Fire Nation gets from everything that we've talked about here today?

23:22Give us some more details again about the sevenfigures.com slash fire, and then we'll say goodbye. Absolutely. So sevenfigures.com slash fire. Not only can you get pre-approved for funding and financing on the entire marketplace, including options at 0 % interest, but we're also going to be giving away two free gifts. We're giving away a digital copy of my book, The Business Funding Formula. We're also going to be giving you credit college. I don't know about you, but in high school college I didn't learn anything about credit and I sure wish I had that's why we built the credit college platform to give you access to all the information and the tricks and secrets to keep your credit score high save thousands of dollars on credit for the rest of your life and hopefully even be able to teach your your family and your children about that so we're giving away those two free gifts and again for business coaches and consultants who are looking to well I need to look at this, how can I get more information on joining your funding partner program on that same link, sevenfigures.com forward slash fire.

24:24You can actually sign up for free as a funding partner and get right into our funding portal, get your custom funding link and start helping your clients secure financing so they can build their dream business and invest in your coaching and consulting. Fire Nation, I'm proud of you because you're listening to this stuff right now. And let's be honest, the education system has failed everybody for an incredibly long period of time. I mean, the fact that we can graduate high school and then even college, supposedly quote unquote, higher education without knowing anything about credit, about money, about finances, about debt, it's absolute insanity.

25:01And it is crushing people before they even have a chance to start in this world. And it's so sad. That's why I love when I talk to people like Leo, who are just putting out great content, great value on this topic because you got to start with this knowledge. You have to start with this knowledge. So I'm proud of you for listening to this type of content, Fire Nation, so that you have this arsenal, that you're armed, that you're dangerous. Fire Nation, you're the average of the five people you spend the most time with. And hello, you've been hanging out with LK and JLD today, so keep up the heat.