Proper Business Finance Mindset

“Having The Proper Business Financing Mindset Can Make Or Break Your Search For Funding”

When you are in search of business financing, either in the form of debt, equity, or some combination of the two, you will benefit from having the proper mindset for approaching this task.

So what do I mean by the proper mindset?

I’m referring to a perspective whereby your focus going into the business financing process is that 1) its going to be more difficult that you think; 2) its going to take longer than you imagined; and 3) the process will take unexpected twists and turns.

This goes along the lines of prepare for the worst and hope for the best, and if the business financing process goes better than expected, then so much the better.

But assuming it will go well from the outset is potentially setting yourself up for failure.

Why?

Because most business financing processes are difficult.

Why are they difficult?

Its a hard question to answer in one sentence but essentially the more people that are involved in the process, the greater the chance for delays, misunderstandings, incorrect assumptions, personality conflicts, and subjective assessment that does not go your way.

So to increase your chances of success, going in with the right mindset can help you stay sharp, make sure things are not slipping into unnecessary delays, and basically not allow you to take anything for granted and to always remember that its not over until funding is fully completed.

If you’re like most business owners or managers that have not experienced the dark side of business financing, then you’re probably thinking that I’m exaggerating.

All I can tell you is that in 25 years of working on business financing cases, it is rare that I see a deal that is approved and funded without some twist, turn, or delay.

Here are a few examples from just this year …

The application process moves to the commitment stage, just in time to fund the deal in the time period available, when the lender adds 7 new conditions into the final commitment without previously bringing them up. It became impossible to meet the conditions in the time remaining to close the deal and the deal was lost.

For a business refinancing case, the applicants accountant promised to provide completed financial statements by a certain date 6 weeks into the future. When the date came, the accountant had not yet started working on the financials, the existing bank pulled their facility and gave the business 30 days to pay them out before the bank closed the business account and started to realize on registered security.

Unfortunately, these types of situations are more common than not. Sometimes we can work our way through them and some times we can’t. One thing that always helps is having more time to work with and staying on top of all those involved to do their part in a timely fashion.

As I have said several times in other articles, business financing is very much about applying at the right place at the right time, but its also about having the right mindset for even when you are at the right place at the right time, things can still go wrong and you need to be able avoid the problems that can be avoided and quickly solve those you can’t see coming.

In the end, business financing is both art and science which is also why working with a business financing specialist can many times get you through the financing process in the time you have to work with.

Click Here To Speak To Business Financing Specialist Brent Finlay

Working In The Right Direction

“Getting Into The Details Early On Will Result In Better Business Financing Results More Often Than Not”

When you’re in the process of trying to locate secure business financing, make sure that you’re prepared to get into the details related to your request right off the bat in order.

The reason is simple.

Because the business financing market can be fairly fragmented, its important to be spending your energy and time working with lenders or investors that can actually help you.

Too often, business owners will gloss over the details thinking that they may not be required to get the financing they are looking for.

Well here’s a news flash… the details are going to be required 95% of the time. And of the 5% of the time they aren’t required, most of the time you’re looking at some sort of financing scam that is more promise than substance.

When I speak of the details, I’m taking about full disclosure of what exactly you’re looking for and the credit and financial profile of your business.

Too often, little details will be missed on purpose because a business owner is trying to hit the warts of the business. But in the end, these items will come to the surface and can kill the deal after considerable time has been already spent.

This is also a problem when working with business financing consultants.

A business owner may gravitate to the financing consultant or broker that is asking for the least amount of information in the hope that he has some sort of special access to funds that can avoid having to do the Full Monty on business.

This is a tactic by some brokers to get you working with them. Later in the process, when you get annoyed with their false promises, you may likely just stick it out and go through the real process with them instead of starting over with someone new. And because business financing placements are usually one off transactions, the broker or financing consultant doesn’t have to worry about losing out on repeat business that likely wouldn’t happen anyway.

Banks and institutional lenders can also be guilty of asking you for bits of information at a time, pretending that they’re not going to ask for everything eventually in order to get you going with their application process.

And when I talk about asking for everything, I mean at least three years of completed accountant prepared financial statements, the current year interim statement supported by A/R, A/P, Inventory, and Equipment sub ledgers, transactional details to support margin levels, two to three years of financial projections, income tax statements, notices of assessment, government remittance histories, personal net worth and credit profile, and so on, and so on.

Even though its a bit of a pain to go through the details a number of times, its far more fruitful most of the time to sit down with someone and spend an hour providing a very detailed picture of what you want and what you have, so that they can provide you with more honest and immediate feedback as to the potential that they can help you or not.

Unfortunately, most business owners AND sources of financing do this onion peeling approach where the information is revealed bit by bit.

If you’re talking to the wrong source of financing, this can be death by a thousand cuts. If you’re talking to the right source, late disclosure of certain things can cause problems getting funding completed later on in the process.

The investment in time in the beginning of the process is a may me now or pay me later type of thing.

By investing time up front, the overall process is likely going to be more efficient because you’ll be working with the most relevant sources of business financing sooner versus starting the process over and over again with unsuitable dance partners.

Click Here To Speak To A Business Financing Specialist For All Your Business Financing Requirements