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This business coaching episode explains how to avoid making funding mistakes.

Results-Focused Training, Tools, and Workshops from Expert Business Coaches.

Featured Coaching Excerpt - Notes & Transcript, Part 1
  • 8 Mistakes to avoid: 3) Unrealistic assumptions
  • Ask Yourself: What sort of growth can I realistically show with a capital investment?
  • 8 Mistakes to avoid: 4) Not giving the entire story
  • 8 Mistakes to avoid: 5) Business built around one person
  • Action Step: Make sure that everything is documented in your business.
  • 8 Mistakes to avoid: 7) Inability to give the global picture
  • Ask Yourself: Can I perceive and portray all aspects of my business? What areas lack information?
  • 8 Mistakes to avoid: 6) Poor personal and business credit history

[MUSIC PLAYING] 

-And this is all about, again, the cash cushion here. And I want to just share with you, we talked about it earlier, but I want to just obsess on this business coaching for a second. You're going to have problems when you run a business or want to start a business. You're always going to run into obstacles, and when you do, you need a little bit of cushion. So that's what people are looking for here.

-Correct.

-Now business coaching for mistake number three, unrealistic assumptions. Sean, are we talking about unicorns here? Or what do you mean by this?

-We're not talking about unicorns flying to the sky.

CLAY CLARK: OK.

-What we are talking about though is coming up with numbers in your business or when you start a business that have no basis. And I'll just give you, I have many examples of these, where you look at-- and this is almost the norm rather the exception. Individual comes in, their business has performed at this level. And they say, if you make an investment, it's going to go like this, right? It's been growing at 5% a year, but with your investment, it's going to grow at 40. Why, is the question. Why?

Now it may make perfect sense. With additional capital we can do this type of marketing and we believe it would bring in more clients. But more often than not, this doesn't typically happen.

-If you're ever thinking about investing in a deal and someone references unicorns and space travel as part of their assumptions, maybe that's something you look out for.

SEAN KOUPLEN: Yeah. I think that's capital concept number eight.

-OK. Writing that down there. OK. So business coaching for mistake number four, not giving the entire story. Sean, are you talking about not being long winded when telling jokes and stories? Or what are you referencing here?

-Well, we all have a tendency to accentuate the positive.

CLAY CLARK: Yeah.

-OK? You're much better off, when you're either raising investment funds or bank dollars, to just be honest about the whole situation. This is what happened, we were very successful, we ran into these challenges, this is what we've done to overcome them. You know, I had an embezzlement within the organization. You know, and it's because my financial controls weren't in place, but now they are.

Just being honest, because what happens is the investor or banker are pretty adept at finding out the truth anyway. And so if you've come forward with a story that isn't accurate but you just think sounds better, you know, or you just want to avoid talking about the negative, they're going to find out the negative. It's going to hurt your credibility. So you're just much better off giving the whole story about your business, your history, and why things have happened the way they have.

-Business coaching for mistake number five, in Spanish that's business mistake el five. A business built around one person. Sean, we talked about this earlier a little bit, but just hammer home why this is such a bad deal,

-We may have just lost all of our Hispanic listeners, but if you're still around, mistake number five--

-I took two years of Spanish and that's what I have mastered.

-Mistake number five, businesses built around one person is just because there's too much risk there, OK? So if the entire business, if you are the engine, if you have all the relationships, you have all the ideas, you have everything, I buy the business or invest in the business and something happens to you, what do we have left? Probably nothing. So that is why that's a big mistake. You have to, even if you're a one person or very small business, you have to show that the processes , the relationships, everything would continue even if you were not around.

-I see this all the time in small business, where nothing's documented. It's just a bunch of verbal, oral traditions, tribal knowledge, kind of stuff. So if you're watching this, make sure everything's documented. It's just super important. And moving on to business coaching for mistake number six, poor personal and business credit history. How could poor business credit history affect the deal?

You know, there are reasons that people go through financial challenges, no question. And most of us have had this happen. But when you have a pattern of making late payments, or not making payments on obligations you have, it just really deteriorates the trust that an investor or banker would have.

CLAY CLARK: OK. Business coaching for mistake number seven, the inability to give the global picture. Sean, are you talking about the inability to travel to the International Space Station and to be able to look down upon the planet, or what are you speaking of?

-No, no that's not what we're talking about. What we're talking about with a global picture is the ability to explain all of your business activities. OK, what happens a lot of times is an individual will own multiple businesses. They come in for a loan and they only tell you about the one that they're borrowing money for.

CLAY CLARK: OK.

-However, the others can take them down and take your loan or investment down just as well. So you need to invest in an accountant to provide you with good global profit and loss numbers, balance sheet, for all of your businesses so that you can portray what you look like in total, not just the one that you're talking about.

Featured Coaching Excerpt - Notes & Transcript, Part 2
  • 8 Mistakes to avoid: 8) Inability to document the income
  • Action Step: You must find an accountant, a banker, an attorney, and a financial advisor.

[MUSIC PLAYING]

-OK. So we're moving on to business coaching for mistake number eight. The inability to document the income. When you say the inability to document, are you talking about tax returns here? What are you talking about?

-What I'm talking about is many times people will function with cash, OK? So somebody comes into my business and they pay me cash, and maybe I don't run that through the cash register, and maybe I just stick it in my pocket. In that way, I don't have to pay tax on it.

-Oh.

-That is illegal, but we all know that it happens. And then the problem becomes the individual wants to portray to an investor or a banker that the company makes a great profit, but it's nowhere to be found on the tax return. So they say, trust me.

CLAY CLARK: Trust me.

-You know, I've taken in a lot of money that you don't see here. And that's problematic on a couple of fronts. One is, there's no way to prove it. The other one is, they've been doing illegal acts.

-So trust me, I've been breaking the law consistently for years. Is that kind of how it comes across?

-It does, it does. And so, it doesn't typically go well.

CLAY CLARK: OK. Now the final business coachingt topic, this is a bonus one that I've put together that I feel like this is a mistake to avoid. I did some research, talked to some guys, and I want to see what your thoughts was. This is a bonus. Just totally, Sean has not seen this. He knows nothing about this.

This is something I have, our team, we've done some research. We've talked about it. Having a bowl cut. I realize that having this mistake could really hurt your chances of raising money, however did you ever have a bowl cut during high school?

-I don't-- I've some bad haircuts, let's let's be honest.

CLAY CLARK: OK.

-I mean, I had the feathered--

CLAY CLARK: Oh, the feathered?

-I had the feathered look. That was probably my worst.

-Would you agree that having a bowl cut could hurt your chances?

SEAN KOUPLEN: I would agree with that. I have to say, I'm going to have to add it to my presentations going forward, because there is no question, having a bowl cut, generally speaking, is a sign of poor decision making and you haven't really thought through the consequences of your actions, or if you have no attention to detail. And all of those are bad when it comes to raising capital.

[MUSIC PLAYING]

 

-You don't just want to put the bowl on your head and let someone shave around it. That's--

-No. They've got to invest the $7 to get a haircut.

-OK, now Sean, I appreciate you going through all this. This is awesome. These are the steps to raising capital in a challenging economy. I would also say the steps to raising capital in a great economy. I mean, this is just how you do it.

And the final business coaching question I had here for you and then I'll let you go, is there any point where we're going to be able to release some of the old school footage of your basketball game when you were back in your All-State days?

-No, I don't think they had footage back then.

CLAY CLARK: Really?

-No, I think everything was kind of scribed on stone, you know? So I don't know if we have any of that.

-Well, for anybody-- you guys can just visualize this. Sean used to just shoot the three pointer from way downtown. It was incredible. So he knows about the financial knowledge, but he's also kind of a closet basketball dynamo.

[MUSIC PLAYING]

 

-OK, so I would say, one final business coaching thing that I would mention, Clay, to your viewers, is if you were considering raising capital for any type of investment, you really need to have good advisers around you, OK? This is not something you want to do on your own. You need to have legal documents written up. There are rules as to how you can raise capital that we just don't have the time to get into.

So I would say this, you always want to have a good accountant around you. Business coaching tip: You really want to have a banker that you can trust. You're going to want an attorney that has experience in structuring investments. And you're going to want to have a financial adviser, someone that manages investments for a living.

And if you can get all four of those together, present them with what you're trying to to, you don't have to have a huge amount of money. Many people will invest time with you just because of the future possibilities that you have, and that will help you make sure that you follow all pertinent laws, think about all issues that maybe we haven't covered here today, and I just think that's very important to keep in mind.

-So quick business coaching recap, we'll put these on the screen here for you. The four advisers you want to have as part of your team before you go out there to raise capital is one, an accountant, two, a banker, three, an attorney, and fourth, a financial advisor.

Make sure you have that dream team around you so that you can avoid some of the legal issues, and make sure you have all your numbers right, and just a great team to help you along the way.

-You bet,

-Sean, I appreciate it.

-Thank you. Appreciate it.

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