The Capital Equation: What Small Businesses Need to Grow with Corinne Goble

0:01Boom! Shake the room, Fire Nation. JLD here and welcome to Entrepreneurs on Fire. are brought to you by High Level, the all-in-one sales and marketing platform. Today, we'll be breaking down the capital equation, what small businesses need to grow. To drop these vibe bombs, I have brought Corinne Goblet in the EO Fire Studios. Corinne is the CEO of the Association of Women's Business Centers, leads national efforts to expand opportunities for women entrepreneurs, and strengthen the small business ecosystem through funding, advocacy, and support. In today's information, we'll talk about the nitty-gritty.

0:33What do lenders look for when they are starting the capital conversation. Let's talk about how to choose the right business goals, how business owners can tell if they're ready to start to pursue funding and oh, so much more. And a big thank you for sponsoring today's episode goes to Corinne and our sponsors. Are you ready for the ultimate all-in-one platform for entrepreneurs, marketers, coaches, and agencies? Build funnels, automate follow-ups, manage clients, and even white-label your own software. Say hello to our featured partner, High Level. and visit highlevelfire.com to start your free trial today.

1:12Tackle everything you need from inventory to payments to analytics and more with Shopify. It's no wonder they have the best converting checkout on the planet. If you want to see less cars being abandoned, it's time for you to head over to Shopify. Sign up for your$1 per month trial and start selling today at shopify.com slash on fire. Corinne, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. Okay, well, what's up? I guess the thing that may be controversial that I really think has helped me be successful and I know has helped other people be successful is being likable.

1:55Being able to break the ice, to charm someone into a conversation to find out, you know, if they have demand for your product or service requires a little bit of being likable. If you're not liked, I think it's harder to be successful. And I do love that Maya Angelou quote, which is, you know, people will forget what you say, they'll forget what you do, but they'll never forget how you made them feel. And if you're likable, if you're a charmer, if you make people feel good, they will remember that. And today we're talking about the capital equation, what small businesses need to grow. And Corinne, the reality is this.

2:30Funding is such a mystery to so many business owners. How can a business owner tell if they're actually at a point where they're ready to pursue funding? I wish I could get to people to answer this question before they really are ready to ask it. If you're thinking about growing your business, it's time to think about funding, even if you think you already have the funding there. If you see your demand increasing, maybe you're struggling to keep up or you think now is the time to bring in additional support to help keep up with that demand. If you've identified some form of a growth opportunity, maybe it's a piece of real estate or it's a new customer segment.

3:17Maybe you're making sales, but you're struggling to keep up, you know, with the day-to-day operations. your email boxes overflowing, you know, with orders or customer service type requests. It's time to start thinking about credit or capital before you need it. Because by the time you run out of bootstrap money, now it's too late. Now you're in trouble. Fire Nation, we don't want you to wait until it's too late. I want you to start when the time is right. And as Corinne's gonna be telling us throughout this, it might be now. So let's talk about why securing funding can actually be so challenging for small business owners.

3:58I mean, if the business owner gets to a point, Corinne, where they're like, okay, I do see that real estate. I see that opportunity. I see this funding that I do need now or in the near term future. Why can it be so challenging for these small business owners to actually secure that needed, that desired, that required funding? Yeah, it's such a complex problem. I think it starts with mindset. And that's why I love the name of entrepreneur, because entrepreneurs are by nature problem solvers. Whereas when we think of just a small business owner may not necessarily be that problem solver. So it's, it's solving some form of problem, maybe even contemplating a problem you don't already have when it comes time to securing that funding.

4:43And we have to overcome some of the stigmas around. Maybe it's a stigma around debt. Maybe there's some fear or shame around securing debt where maybe you've become debt-free in your personal life and you think, gosh, this isn't something I should be doing in business. But you obviously don't have the$10 million to go buy the commercial real estate that you need. So it's overcoming some of the mindset and getting past it early so that you haven't delayed yourself into some sort of, you know, now you're in a too late situation. And I think one of the other challenging pieces is people tend to sometimes skip foundational steps.

5:26They get excited about that next business growth moment. And that excitement can lead to jumping over key steps without some of the key elements like, and really this is a big one, like actually writing down the business plan, even if it's just in bullet points or having those financial projections on paper. You would be amazed how many times we encounter people have signed that lease on that next location or decided to move forward and they've not put anything down on paper, but it's going to help you to have that on paper, not only for your own mindset and uncovering some of the unanticipated turns you may experience, but also being able to present that to your funders, obviously a key component.

6:12And then I guess the last one, and sometimes this surprises people when they think everything's ready to go. They may encounter that they've got credit issues they didn't know about. So credit issues are common. And we sometimes don't want to be transparent about them or be open to try to address them. But we find that overcoming those and addressing those early is a key to success. Corinne, let's get into the nitty gritty for a second here. What specifically do lenders look for when starting the capital conversation? You know, I think there are sort of two different paths when we're looking for capital with a funder, you know, especially for borrowing money.

6:53And there's a difference between a startup, even if we're just starting up another business, maybe using existing business growth to launch another business that would still be considered a startup or just growing an existing business. And in either case, though, we do have to have a clear plan for how we're going to use the capital. There are some things that funders are really looking to avoid. And you want to know what those are, too. Funders don't want to hear you say you're going to use this loan to just pay off debt. Unless this is just a pure refi loan, they really don't want to see you paying off bad debt.

7:32They want to see you using this to propel your business forward. And they want to know how is this funding going to help your business thrive? How is this funding going to help your business grow? The other thing that funders are looking for is they want to know you're really prepared. You've got the business plan. You have a personal financial statement. Your projections are on paper. And also they want to know who in your business is going to be in charge of that new location or the growth. they want to be sure that there's expertise in the business. They don't want to hand the keys over to somebody who doesn't know how to drive.

8:07They want to make sure that your business is in good hands because if it is, their money's in good hands. They want to be sure you're in a position to pay it back. So that's the bottom line. They're looking at all of the different ways you're going to be in a really healthy position with your business, obviously to pay it back. Fire Nation, I want to talk about the different types of funding, different systems or support that can help make this process easier and a lot more when we get back from thanking our sponsors. Okay, let's talk about a platform that's completely changing how entrepreneurs are running their business, and they are also our featured partner, High Level.

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12:31That's in part because it helps you tackle all those important tasks in one place from inventory to payments to analytics and more. And did I mention that iconic purple ShopPay button that's used by millions of businesses around the world. It's why Shopify has the best converting checkout on the planet. Your customers already love it. If you want to see less carts being abandoned, it's time for you to head over to Shopify. Sign up for your$1 per month trial and start selling today at shopify.com slash on fire. Go to shopify.com slash on fire, shopify.com slash on fire. Corinne, we're back. And there are many different types of funding available.

13:13And frankly, I don't think a lot of people even know that there's even more than one. So maybe kind of go through and talk about some of those different types of funding that's available. And also letting us know through that process, how do we choose the right fit for our specific business, for our specific business goals? Yeah, well, it's such an important question. we really have to be sure when we're working with a business that we're traveling down the right path to be sure we're getting the right type of capital. Sometimes, especially like in a startup, a business is thinking they want an investor.

13:45They want somebody else's money that they don't have to pay back. And that can seem really attractive. What they may not be thinking about or really accounting for is that money comes at a completely different kind of cost. And that what we call equity capital is a shared ownership stake in the business. And so people don't necessarily want to be sharing the decision making or sharing the control about their dream and their business vision for the future. They're just thinking they're going to get this money. It's going to be not something they have to pay back out of their own pocket. It's going to come from some of the proceeds of the business.

14:24And they're really not thinking about what the shared control is going to look like. So we want to make sure people understand that equity capital comes with, you know, the fact that you're not going to now own all of your business. You're having to share ownership. that can make debt capital or borrowing money really attractive, whether you're starting a business or trying to grow a business. Because with debt capital, with the exception of maybe a couple of the things the bank's going to require, you really are going to maintain control over the business while you borrow that money and attempt to pay it back.

15:00But again, you keep full ownership. I think some of the important things to think about, though, when we get into debt capital is that there are so many different types of loans. And in my opinion, there's good money to borrow and there's bad money to borrow. We really have to be mindful of what kind of interest rates and what the cost of the money that we're borrowing is. We're really seeing a terrible trend right now, especially among online retailers in some of these merchant cash advance loans. And it's not that merchant cash advance is bad, but it's that sometimes businesses are getting too dependent on merchant cash advance, and they're not really aware of what the interest rates are.

15:42So they're borrowing money that is being paid back as a percentage of sales, and it's not like a set payment. And then this sort of can compound the cash flow problem. So they borrow more and they get themselves into kind of a snowball. Then they think they might, maybe they want to go refi that. But now we've seen some changes in the regulations, especially among the federally secured loans like SBA loans. We're not even allowed now to go refinance merchant cash advance loans. So we want to be really careful about loans where we don't see, you know, the annual percentage rate like published and it's not just a fixed payment.

16:21So we really want to be careful of that. Make sure that when we're borrowing money, we know exactly what the interest rate is. We know exactly what the payment's going to be and what the terms are going to be for that loan. So Corinne, for people that are listening right now, and they're kind of nodding their head, and they're realizing that, man, I'm learning a lot. I like the fact there's a lot of different options that are out there. And I really feel like I maybe I'm not gonna be going down some paths I shouldn't be going down because I'm getting educated here in this moment. What are some systems or support that can actually help make this funding process less overwhelming?

16:56And of course, our end goal, more successful? We call the kind of advice you get around funding technical assistance. It seems like such a bizarre name, but if you want to find out where you can find a technical assistance provider, that's something you can go search online. And then we also have free resources. All of our funding that supports us comes through private sources, and we're able to provide free technical assistance for small business owners. And we have this at our funding center at biz2grow.org, just like it sounds, the number two, biz2grow. And we can actually support the business owner by providing a free online assessment.

17:39So it's totally confidential. It avoids the embarrassment or shame of answering a question and finding out maybe you're not really ready to access, say, borrowing capital. So there's a funding assessment there. There's transparency about all of what lenders are going to be asking for. Things like we tell you, hey, make sure you filed your taxes. They're going to want to see your last tax return. And this is kind of a private way for a business owner to assess, are they ready to borrow money? And then it builds that confidence. So when they're ready to ask, we're there with them. But we also offer free counseling, one-to-one live counseling.

18:15And all of that's free just by requesting assistance. and all of that is available at our biz2grow.org. Now let's take a step back for a second and of course keep the names completely private. We're not looking to expose anybody or any company or anything at all but I think it'll be very helpful for our listeners to maybe have an example of you working with a client in the past or one of your favorite case studies that you have. Can you kind of maybe take us through what that looks like from when the person or the company reached out, you having a conversation with them, counseling them, guiding them, helping them with systems and support.

18:49And then of course, what it looked like on the other side when they were successful. Can you kind of walk us through a quick story? Oh, sure. Oh, I'd love to. And I think that one of the things we like to pride ourselves on is our knack for helping a business turn a no into a yes. Maybe a business has gone to a funder and they were initially just told no and the bank wasn't interested. Maybe the amount of money the business was asking to borrow was too small and the bank just wasn't interested because they don't make enough money on a smaller loan. And so rather than tell the business owner, hey, if you could use more in your business, you could borrow more and this would become attractive to us or whatever the answer.

19:28But that happens a lot. And so we get a lot of business owners that come to us that have already knocked on the door of a bank and they've been told no for one reason or another. Love to turn no into a yes. And I've got a great example of that. So I don't know if you, John, or your listeners know what a boudoir photographer is? I don't think so. No, it sounds French. It's a little bit of an interesting, kind of a newer maybe line of business where a photographer will take sort of sexy pictures of a woman. And often those are used as like a, as like an anniversary gift to give to her fiance or to her husband.

20:05It's like an intimate photography gift. And because of the nature of this line of business, it's not something that all banks are comfortable lending, especially like we think of the federal guaranteed like an SBA loan. And so we had a boudoir photographer. She had a wildly successful business and she was looking to acquire another boudoir photography business. So this was an expansion for her and an acquisition. she had all of her paperwork in order and everything, you know, on paper looked really great. But the first bank she went to told her, no, we, we can't do a boudoir business. And she came back to us and she said she'd been to two or three banks.

20:47They'd all told her, no, we went to one of our key banks. They also came back, no, and we really had to do some digging to find out which lenders out there have done other boudoir photography like loans. And we found one. This is a national bank and they were excited about doing the loan. It was a great loan for them and it was a great opportunity for this business owner to expand our business. And so, you know, this was a great chance for us to turn that no into a yes. I love examples like that. So thank you for breaking that down. And you've gone into this a little bit, but let's really kind of take it home with a bang here.

21:24If our listeners right now, they're consuming this content, they're nodding their heads, they're feeling stuck, or maybe they're even a little intimidated by the capital landscape as it sits right now, which by the way, would be very normal to feel that way. What would you recommend their next step to be? Yeah, it's super intimidating. I know, for me, when I came into this line of work, I was really all about helping and educating businesses. But I was intimidated by just even the word capital. Like, why don't we just call at funding? Why do we have to make, you know, the vocabulary so intimidating around funding?

21:58I'd always say just reach out for help. I mean, getting someone to explain it, to break it down, to answer the questions that might seem silly to you. These are questions that all businesses come to us with. You know, we're happy to help guide someone. And again, it's all free. The first step is just to reach out to biz2grow.org. Lots of ways you can assess yourself or you can request assistance and everything there is always free. I love all of that because Fire Nation, at the end of the day, you realize you're the average of the five people you spend the most time with. And you've been hanging out with CG and JLD today.

22:33So keep up that heat. And for links to everything that we've been talking about today, visit eofire.com, type Corinne in the search bar and the show notes page will pop right up. And one more time, Corinne, if Fire Nation wants to connect with you, wants to have a conversation, what is your call to action for our listeners today. Definitely check out biz2grow.org. Everything there is free. Corinne, thank you for sharing your truth, your knowledge, your value with Fire Nation today. For that, we salute you and we'll catch you on the flip side. Great. Thank you. Hey, Fire Nation, a huge thank you to our sponsors and Corinne for sponsoring today's episode.

23:08And Fire Nation, are you ready to rock your very own podcast? Check out our free podcasting course, where I will teach you how to create and launch your podcast for, you guessed it, free, freepodcastcourse.com. I'll catch you there or on the flip side. Are you ready for the ultimate all-in-one platform for entrepreneurs, marketers, coaches, and agencies? Build funnels, automate follow-ups, manage clients, and even white label your own software. Say hello to our featured partner, High Level, and visit highlevelfire.com to start your free trial today. Tackle everything you need from inventory to payments to analytics and more with Shopify.

23:52It's no wonder they have the best converting checkout on the planet. If you want to see less cars being abandoned, it's time for you to head over to Shopify. Sign up for your$1 per month trial and start selling today at shopify.com slash on fire.

24:14Thank you.