It’s day two of the Black Enterprise Entrepreneurs Conference, sponsored by Nationwide, in Columbus, Ohio, and serial entrepreneurs, and business owners from Columbus as well as around the world are taking advice and gaining experience from those who’ve succeeded in creating monumentally successful businesses.
In a panel moderated by Black Enterprise’s own Derek T. Dingle, finance and business experts gathered to learn how to raise capital effectively.
The three panelists were Eugene Cornelius, Deputy Associate Administrator of Field Operations for SBA, Keith Burgess, Manager of Community Development Lending and Investments for Huntington National Bank, and Rumia Burbank, President of VMS 365 and founder of Sol de Frio. They all offered tips for successful capital raising, ranging from thoroughly examining your business plan to just having lunch.
Don’t get discouraged:
Even with an established track record, raising capital can be a challenge, as Rumia Burbank noted. Despite her successful 15-year old business, securing funds for her café and dessert shop Sol de Frio was a challenge. Her café had a low overhead thanks to its self-serve concept, but she still found it “easier on the corporate side to get funding.”
There are some businesses that are harder to secure funding for than others, namely industries like restaurants, hotels, and gas stations, according to Cornelius..
Be quicker than your competition:
Burbank’s ingenuity let her take advantage of quick pay agreements, cutting the time between payments from companies by more than half, and taking the average 90-day pay cycle down to as low as 15 days. This, Burgess agreed, helped Burbank build her line of credit and get cash faster. “A line of credit isn’t a substitute for equity,” Burgess said. “It’s to bridge the cash gap.”
Preparedness is key to making the entire lending process run smoothly, according to SBA’s Eugene Cornelius. “One essential thing you need is a business plan. The best thing you can do is be prepared.” The upside to truly analyzing your business’ potential success is increasing the chances of getting the proper loan.
SBA offers loans up to $12 million “for building and buying supplies and inventory,” according to Cornelius. Even if you have damaged credit, if your business plan is thorough enough it will increase the chances of underwriters giving you a loan.
Your banker is your best friend:
Burbank went to a smaller bank to get her loan, and took advantage of the more intimate experience. “Everything is relationships,” Burbank said. “If you’re not [building a relationship] you’re missing opportunity.” One way she builds rapport? “Once a month, my banker and I go to lunch.”