The Business Financing Systems Do Not Work – Why and Why Not?
Part II of a Continuing Series on Small Business Financing – See, http://vetlikeme.org/business-financing-systems-do-not-work-why-and-why-not/
As noted with Part I of this VetLikeMe series, the past and current systems of traditional business funding simply do not work. Such do not deliver adequate timely financing when and where needed most for small business successes, especially as regards veterans.
It’s no secret that access to capital is one of the most pressing concerns for any small business, and vetrepreneurs are certainly no exception. In fact according to the most recent NaVOBA poll, it’s your biggest concern. Vetrepreneur Magazine (March 2015).
Further confirming that fact is the May 2015 Wells Fargo/Gallup Study on Small Business Financing,
The obvious questions arise as to why and how to remedy? As might be expected, given the mix and interconnections between and among a host of influences and variables there are no simple answers – every intelligent effort requiring in depth detailed investigations and individual analyses by funding types or categories.
As expressly noted within Part I of VetLikeMe series:
[It] is no easy task. It requires individual scrutiny within each area or type for serious revisions and changes involving a multitude of stakeholders. Such an analysis and discourse is far too broad for this single commentary (such is however embodied within the treatise, The Ultimate Financing Guide, http://www.ultimatefinancingguide.com/).
First one must recognize that for every generalization there will always be exceptions. Add to the mix, contrary to broadly based assumptions to the contrary, every single client and business deal has specific nuances that can often make for a “twisting challenging road” to achieve transaction success.
The devil is always in the details!
Academic and hypothetical suppositions rarely coincide with the “real world” of business and financing.
Secondly, there are at least two primary players in this funding matrix – the financing source side and the small business funding seekers/applicants. In many ways, these two factions often are akin to “ships passing in the night” never coming eye to eye or meeting for cooperative mutual benefits. For real answers, it is suggested that the quest starts by considering these separate component parties within the mix:
* The financing source industry as a whole and its effectiveness in support of small business growth and prosperity or the lack thereof;
* The client or small business enterprise side of the equation; and
* From those analyses, what can or can not be done on either side of equation (funding source versus enterprise need) to rectify or improve beneficial outcomes?
From the funding side of the matrix, it’s a rather straight forward paradigm:
* The color of money is green. It is a wholly neutral, non discriminatory medium or mechanism. It could care less as to color, gender, ethnicity, religious beliefs or any other facet or characteristic of its seeker or possessor. It comes in a wide variety of forms generally referred to as financial tools or funding mechanisms.
* Access to or use of that funding mechanism tends to guided, often controlled by actual or perceived risks in any specific endeavor, investment, venture or enterprise. In the “real world” of money, the lesser the perceived risk the lesser the overall capital cost (for both sides of the equation). The flip side is the greater the perceived risk the more costly that form of capital or funding.
* From the funding source side, the underlying “cost of capital” for its own funds drives not only availability, but as well price markup, and offerings for its brand of financing to small business;
* Perceived risk, availability of funds, and the cost of that capital accordingly tend to be the key elements within every small business financial offering. Not to be ignored within these elements are lingering shadows of the past recession still hovering about as well as the ever changing business cycles/events impacting the overall economy (both good and bad). Not to be left out are the ever present (often increasing) governmental, regulatory strictures and pressures that influence all financial matters (on both sides of the equation).
* From the capital source perspective it tends to rather simplistic: “He who has the gold, makes the rules”. These rules invariably are founded upon perceived risks involved, costs of capital, and basic supply/demand principles. Either satisfy
the stated criteria and all risk parameters or the “gold will not leave the vault doors”!
The trick is to stop thinking of it as “your” money entirely
In this Series, individual treatment and investigations into key types of financing or financial tools, all complicated subjects within themselves, will in due course be hereinafter presented.
To find the better overall options/means to rectify or correct, our starting point begins with the “flip side” within our equation – the entrepreneur and small business enterprise seeker or applicant. Why? Unlike the complexities within every financial type or tool, and variables created and intertwined with multiple stakeholders, within the enterprise side there exists only one player with infinite prime influencing factors being more readily identifiable.
Simply put, from the applicant perspective, the acquisition of business financing is both a science and art form. It comes with its own built-in language or structured logic which varies by financing tool and type. Without that requisite knowledge and mastery of that language or logic, the business journey inevitably becomes tedious, expensive in terms of time, and resources, and often highly adverse in consequences.
“Money is usually attracted, not pursued”. Jim Rohn
It is within this area that will first be explored in more depth in the next Series of installments.
(Profile: Woodrow D. Wollesen, recognized national small business financing expert, former co-partner national law firm, seasoned entrepreneur/business executive, financial/business operations consultant, former graduate school of business professor, military veteran; 2006 US SBA Small Business Financing Champion, (8 years) Board Member, Executive Officer, Instructor with the prestigious National Women’s Business Center, Washington, DC; NWBC 2005 Man of the Year – see also more extensive background profile at http://www.ultimatefinancingguide.com/about-the-author/; LinkedIn www.linkedin.com/pub/woodrow-wollesen/11/147/652/;
** The Ultimate Financing Guide deals with all the critical issues noted in this article in an objective and comprehensive fashion seeking to provide remedies for all stakeholders – all “win-win-win” outcomes. It provides for entrepreneurs and business owners for the first time a thorough, detailed roadmap respecting every facet in preparation, required records, the entire array of available financial options or tools, and how and when to acquire that financing in pragmatic, practical terms – how it works in the real world of business financing. The complete treatise and resource is FREE for all military veterans and their family members (There is a token $5 fee/contribution required for the maintenance of this Internet site which benefits all veterans. That ensures that in fact that “Veterans are helping Veterans to Succeed”.) Download and see for yourself. http://www.operationveteranempowerment.com/ http://www.opvetempower.com
For non veterans, a deep 50% discount off the standard retail cost is available for all client, members of this project’s established supporting partners . http://www.ultimatefinancingguide.com/