The Invaluable Asset

What is the key to creating a business and making it successful?  Driving sales?  Finding inventive ways to create more return on your profits?  What about developing and maintaining a great marketing campaign?  How about building a strong brand name and story?  I mean, sure; all of these are important components to your business.  However, I have seen a declining trend over the past few years (especially recently) of one of, if not THE most important keys to the puzzle of building a sustainable company.  It’s something that you can’t purchase, even though it’s the most valuable asset a company can have.  That asset is integrity.  It cannot be bought or sold, but it can make or break an establishment.  Some companies are built on the integrity of their product.  Some businesses pride themselves on the integrity of their customer service.  Whatever the case may be, the alarming trend is the fact that many people within today’s businesses are sacrificing their integrity to make a quick buck, advance their career or company, or fulfill a desire.  It’s truly unfortunate, especially considering often times they are running a company in which we all have interacted with or at least heard of.  Take a look at former Yahoo CEO Scott Thompson, who lied on a resume about a degree he said he earned but didn’t.  There’s also Brian Dunn and Richard Schultz, former CEOs of Best Buy.  Dunn was caught having an inappropriate relationship with an employee and it subsequently led to his resignation.  Just today, Schultz resigned after it was discovered that he knew about the misconduct and failed to report it to the board members of the company.

To be frank, I just don’t understand.  I was brought up to know that a person is only as good as their word.  My parents, teachers, and employers all talk about the importance of having good morals, values, and ethics.  How do we teach this to the next generation when they turn on the TV and see stories like this?  It’s unfortunate to say the least.  So what can we do?  As those in my generation grow into the CEO positions and we become the leaders, what can we do to make sure that we don’t sacrifice the ideals in which we were raised on just to get ahead?  The true answer is YOU.  Only you can make the internal decision to do what’s right, for better or worse.  Everyone has that reminder they can think of in times where you may be tempted to steer away from what you believe in.  Maybe it’s a photo of someone special, a promise you made to yourself, or your grandma’s look if she would see what you were about to do.  Whatever your “thing” is, find it.  Remember it.  Use it.  In a world where temptation is put in front of you every day and our beliefs are put to the test, it’s important to try to live each day being the person you want those special to you to see.  I hope our future leaders of commerce can look upon the bad decisions of our current CEOs and learn from the history instead of repeating it.

Finding Funding for your Startup

Finding funding for a business venture is one of the most difficult things you will face as an entrepreneur.  Next to finding customers that are willing to pay for your product or service, accumulating enough capital to get your business off the ground is probably the biggest obstacle when building a viable business.  Obtaining financing as a business owner can be difficult today.  Although we are seeing some growth in the economy, banks and angel investors are still being much more cautious when it comes to taking chances on startups.  Additionally, credit scores have been damaged virtually across the board looking back on the last 10 years.  With one of the two circumstances affecting many budding entrepreneurs, looking for alternative funding is a must if you want to continue to chase your dream.

There are several forms of alternative funding that you can use to achieve startup capital for your company.  One alternative to standard bank loans are SBA loans.  SBA loans are used in most cases when all other forms of alternative funding are not available to the business owner due to certain circumstances.  The SBA backed loan tells the bank that is actually loaning the money that the government will cover a portion of the loan in the event that borrower defaults.  There are obviously additional regulations when utilizing an SBA loan, so regular funding from a bank is better if it can be achieved.  Otherwise, an SBA loan makes it less risky for the bank to take the chance and give you the money you need.

Invoice factoring is another form of funding for a startup business.  This is a good way to get money quickly for some businesses.  Once you have identified a business to work with and come to an agreed upon loan amount and conditions, you hand your accounts to the factor company.  The factor company will control all of the agreed invoices processing, take their share of their monthly payment, and send the rest to you.  This process continues until the loan has been paid off.  Once that happens, all accounts transfer back to your company.  The primary disadvantage of this is the control that is given to the factor company during the loan duration.  This risk is often times overlooked though, as there are many advantages for cash poor companies in need of funding.

When selling a tangible product, your supplier may be just the person to help you with funding.  Many businesses achieve funds for their business by striking a deal with their supplier.  The company in need of cash will receive a loan at a fair rate in exchange for a guarantee of business.  A “you scratch my back, I scratch yours” scenario, supplier financing can also offer additional benefits, such as the ability to utilize consignment shipping.  Companies often times ask for this clause in the contract with the supplier.  Doing so can save your company’s need for storage space and help in controlling overstocked items.  The biggest disadvantage is that you are now locked into that one supplier, regardless of how the business is working.  If the company were to outgrow the supply, things can be tricky for both parties on how to get out of the agreement or settle on new payment terms.

Probably the most hip, innovative way of capital funding is through the use of crowdfunding.  Many websites, such as Kickstarter and Crowdfunder, connect entrepreneurs with business opportunities with people who have the money to donate to their cause.  In return, the businesses receiving the funds have to give perks and/or rewards to those who put in money.  The biggest advantage of this is that you don’t have to pay the money back.  Additionally, funding can be easier for some as more people invest in smaller amounts.  The biggest disadvantage to this is the risk that your pitch doesn’t work.  If you set your goal at $10,000 for your venture and you only meet a $9,000 balance, all of the money is pushed back to those that donated and you leave with nothing.  This type of funding seems to be most popular with musicians and tech projects.

To bring everything together, the point I’m trying to make is to not get discouraged.  As I said before, almost every business owner at start struggles to get the money they need to get their company off the ground.  The good news is that there aren’t just one or two outlets to obtain funding.  If you work hard, do your research, plan correctly and understand your goals, getting the money you need to launch your business is just down the rabbit hole.  You just need to take the plunge.