How to Finance Your Business for Long-Term Success. "Well-Funded" Businesses are Dramatically More Likely to Succeed. STARTUP FINANCE STATISTICS (Small Business Trends)
“82 percent of businesses that fail do so because of cash flow problems”
3 years ago, I took the leap of faith jumping from corporate America to start my entrepreneurial journey and several decade dream of becoming a business owner. Since then our business timeline has been sprinkled with many obstacles, each one seemingly insurmountable with failure often looming. We have stumbled, faltered, hit dead-ends, persevered, morphed and adapted on our way to becoming a viable business. Our model is not the same today as it was when we launched. We are growing rapidly because of flexibility and an insatiable appetite for knowledge and how to use it optimally. We focus on what we do well and drive all efforts to deliver on our purpose. We continually evaluate to ensure we are solving a marketplace problem with a differentiated approach. We are passionate about our mission, which resonates with our people and clients who are like-minded. They are invested in our services for themselves and their purpose. We are measured by our client’s success and if we can increase their chances we make a difference in the community.
Knowledge is aptly known as "King" and people will pay for it. Judgment on how to use it is fundamental to business success. Experience is the bedfellow of judgment, but I wish I knew what I know now when I launched Lavan Financial Group almost 3 years ago. It’s the journey and not the destination personally, but not so much in business. Although trying and failing is part of the journey to success it's clearly the goal to be one of the few business owners that make it on the first attempt. Not many do, but they have more chance on the next attempts. Founders of a previously successful business have a 30 percent chance of success with their next venture, founders who have failed at a prior business have a 20 percent chance of succeeding versus an 18 percent chance of success for first-time entrepreneurs. Don't give up, just be smarter, which the experience can fuel.
STARTUP FINANCE STATISTICS (Small Business Trends)
- The vast majority of startup funds (82 percent) came from the entrepreneur himself or herself, or family and friends.
- 77 percent of small businesses rely on personal savings for their initial funds.
- 40 percent of small businesses are profitable, 30 percent break even and 30 percent are continually losing money.
- Having two founders, rather than one, significantly increases your odds of success as you’ll:
- Raise 30 percent more money
- Have almost 3X the user growth, and
- Are 19 percent less likely to scale prematurely.
- 82 percent of businesses that fail do so because of cash flow problems
Obviously, each business is different, the owners and founders’ backgrounds and skill-sets are each unique, but principles and best practices can easily be adopted and tweaked to help improve success. This is the premise by which we endeavor to reduce the small businesses failures, improve local economies and increase employment.
Imagine you stumbled across someone who in some key ways appear to understand and relate to many of the hurdles you battle every day in your business. Mildly intrigued you put some time aside to determine if there's value for you to engage further. You take some time to understand each other’s business purpose and a sense of trust and affinity develops. We want to get to know our clients and for them to know us. We want to know their why and for them to know our why. We are not offering a quick fix boost to sales, gimmicks, access much faster, bigger better, scare tactics, desperation, scarcity, buy this now transaction industry, oriented value proposition. We offer a full value chain service and provide content and solutions for no cost. Our clients can opt in for paid services, but they are not obliged to, to gain the differentiated value we deliver.
Be amongst the 25% of small business success stories, and not 75% of those that fail. Capital is the fuel of a business, like a car without fuel the business does not work. Learn the secrets to building a business foundation with speedy access to capital so you can focus on building and running the business and not worry about funding it. It's not rocket science, but it's not common knowledge either. If you don't know, how can you benefit? Lenders and investors don't tell you, they are not interested in educating you. Here are some lesser known secrets every entrepreneur, business owner, and those considering their independent journey should know.
There are simple steps or 4 legs to developing access to the funds your business needs. While establishing them sooner is helpful you can easily maneuver an existing business foundation to reap the same benefits. The first leg, compliance we will touch on now and the others in subsequent blogs.
Most banks and commercial lenders have a checklist of 20 items a business should satisfy. If not the lender believes it's statistically more likely you will default on a loan. Of course, being in that bucket will most likely cause you to be declined. Up to 90% of business loans are!
The problem is that business owners simply aren't aware of these compliance items and, even if they are, don't know how to go about properly addressing them. They often try and miss the mark and are too busy to follow through.
On the surface, most of these 20 Compliance Items would appear to be simple tasks but, unfortunately, that isn't always the case. As an example, one of the verifications that most lenders and credit providers perform is to call directory assistance and ask for the listing under your legal business name. If there is no listing then you'll more than likely be declined. But having your business properly listed with 411 directory assistance under its exact legal name is a simple task. Isn't it? It can be much harder than you think.
Is your business phone a VOIP, or a virtual system, or a cell phone? Call your local 411 now and ask for your business under its legal name (your business name as listed on your State filing). 411 calls route from your local service provider to the carrier for the phone you are calling from, such as AT&T routes to AT&T, Verizon to Verizon, etc. Let’s say you have AT&T and you call 411 to find that your business is listed. Now use a friend’s phone that has Verizon, Cox, or any other local provider. Is your business still listed? What about a lender who calls to verify from an outside area code? They would more than likely dial 1-XXX-444-1234. Be sure to test for that too because, in many cases, those calls route to the national directory assistance database and not to the local service provider.
If you know how to you should correctly submit to the national directory assistance database and ensure that local area carriers have a listing for your business.
Ok, we've covered one very "seemingly simple" business compliance item. There are 19 more that seem just as easy when, in reality, it can make all the difference to have someone walk you through each and provide specific instructions on how to properly complete them. And just as important, how to complete them for all lenders no matter what state they are in. Missing just one of these items can result in your loan request being declined and, unfortunately, most credit providers will just send you a declined letter rather than take the time to go over which items you failed to complete and how to correct them.
Sign up to receive our compliance "Cheat Sheet" Comprising the full list of 20 compliance items (compiled from 7,000 lenders and companies who extend credit) most likely to cause a decline.
Start now to ensure you're on the way to setup for success and you know what’s required to satisfy the first leg of bankability.