Financing Your Business is Easier than You Think

It’s a strange phenomenon that people who have the courage to run a business often do not realize that they also have the power to attract a whole range of financial options. And I don’t mean the soul-crushing bank loans from yesteryear.

(This is an excerpt from my book Money Magnet published by John Wiley & Sons Publishing)

If you are the owner or CEO of a business, congratulations. I am thrilled to have your attention. Using the information in this book will guide you to the money you deserve for having the gumption (some might say “craziness”) to take your kernel of an idea and grow it. Perhaps right now your business is a little sapling or maybe you’ve got yourself a fine, mature oak. However large or small the plant, wouldn’t you agree that it needs a reassuringly continuous flow of water to survive? Every business, similarly, needs a flow of cash to keep going. Did you know that today, attracting investors is astonishingly within reach of all but a few businesses?

Money is available to more companies

Here’s a little secret about money: it’s uncomfortable.

Most business owners believe that their company does not make enough cash— even when revenues soar up in peaks as high as the Rockies. There is also a belief that money is not something to discuss with others. Add to this the embarrassing discomfort owners have of inviting someone to take a look under the hood of their company and provide a diagnosis of their finances. Yet these same owners are scared out of their minds of being beaten to the customer by brash new competitors (bolstered up by newly available investor money).

Yet the world is getting flat, or as Roger Martin, Dean of Rotman School of Management, says—spiky—and your business can get crushed by a foreign company with twenty Sanjays for their one Bob or Mary.

If producing technology, how can owners make sure their product gets to the market fast enough? If they sell a service, how can they come up with fresh ways to bring back fickle clients? If rooted in manufacturing, how can they set up a plant outside of North America as every consultant seems to be urging with all the Wisdom of Solomon? Let’s face it—this new competition from other countries clearly needs to be counteracted by Canadian companies.

Money is needed by a range of businesses

Now, business owners, like cars, come in all sizes and models: There are young founders hammering away at their keyboards on weekends, others with their prototype bits and pieces scattered across the garage where their spouse’s car ought to be parked. Then there are those owners who have been at it a while with good revenues but costs hoovering up the cash flow. And let’s not forget those forty-year-olds in family businesses who are chomping at the bit to take over from Pops but wondering how on earth to buy him out. Money is required to take businesses to the next level.

On the home stretch of business ownership, there are those 50-ish and 60-something CEOs out there, increasingly aware that even the Rolling Stones are getting closer to converting their tax-sheltered savings into annuities. They are growing vaguely uneasy with all the talk of thousands of companies coming up to the sell point as the baby-boomer owners prepare to retire. Much of this transfer of assets will involve deals of $25 million or less.

Oodles of magazine articles urge owners to “Get serious about succession planning” or “How will you get money out of your business?” or “Sell your business because retirement is just over the hill” (excuse the pun). Many are downright scared: Who is going to buy their business? Boomer business owners are berating themselves for not selling their companies sooner, for overshadowing and stunting Junior’s growth, or for not better developing potential successors’ management skills. How will they ever cash out to enjoy those dream golden years—golf in Arizona, trips to visit the grandkids, that special house by the lake?

Probably, you too have woken up at 3 a.m. with a soul wrenching experience where you awoke depressed and consumed by the gloomy thought that your business is asset rich but cash poor. How will you transfer value out to your retirement fund?

When both profits and the exit door become harder to find, it’s not surprising if your confidence and the passion you once felt for your business begins to ebb away.