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This online business coaching episode will help you learn how to improve your credit score.

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

Featured Coaching Excerpt - Notes & Transcript, Part 1
  • 5 C's of Credit: 4) Character - The way someone thinks, feels, and behaves; someone's personality.
  • 5 C's of Credit: 5) Capacity - The ability to hold or contain people or things.
  • 11 Keys For Putting Your Best Foot Forward: 1) Prepare a detailed financing package

-Now business coaching for C number 4, character. As defined by the good-natured people of integrity who define things at Webster's dictionary, this is the way someone thinks, feels, and behaves, someone's personality. Sean, what does this mean here?

-We're primarily interested in the way that someone behaves. At the end of the day, if you are coming to us for a loan or an investment when you start a business, we want to make sure that you do what you say you're going to do and that you can handle the diversity. Business coaching truth: Every small business owner has to handle adversity. I don't care who it is, you're going to go through difficult times. So as an investor or a banker, we are trying to determine, are you the type of person that will stay in the game or are you the type of person that will fold whenever times get tough.

-So we're going to go through adversity and you're just saying this is going to happen. You as an investor know it's going to happen. When you invest in someone, you know, OK, buddy, you're going to go through some stuff. Will you keep it together.

-Exactly. And will you tell me the truth and will you portray the situation as is without just providing the good news without the bad. That's what you want. You want somebody that you have full faith in. I mean, the reason we've done deals together is because that's why I feel about you. All of my business partners, we are in business because we trust each other.

-I just, I think that is so big and we're not going to get off topic here and really dwell on this, but we have some great training on Thrive about character and at the end of the day, if you do every single thing on Thrive, but you don't have character, it won't work. Business coaching advice: So just make sure that you don't minimize the value of that there.

Business coaching for C number 5, capacity. As defined by this wonderful wordsmith Webster's dictionary, the ability to hold or contain people or things. When you're talking about capacity, what are you talking about there?

-What we're really talking about here is financial capacity, so we're talking about the ability to absorb unexpected downturns. A lot of times this is defined by your net worth, it's defined by savings that you have, liquid assets that you have, a guarantor that you might have, somebody backing you. And so what you're doing is, you're basically looking as an investor or a banker you're saying, OK, if things don't go the way that we hope, do they have the ability to still stay in the game and turn it around.

-So capacity could deal with your net worth, your ability to stay in the game and turn things around if you needed to. Now, we're moving on your to business coaching for capital concept, number 6, the 11 keys for putting your best foot forward. Sean, as we get into this here and we talk about putting your best foot forward, the way we're going to do this is, I'm going to bring up the big idea and I'm going to have you bring some clarity here. So here we go with this business coaching.

1, is prepare a detailed financing package. Sean, what does it mean to prepare a detailed financing package in your mind?

-So what happens very often that an individual who wants to start a business will come to either the bank or to an investor and present their idea and then really kind of ask them what they think is fair. So I want you to invest money in my company, but I don't really have a proposal for you. So it's important when you're coming to the table for either one, A, that you have your numbers all in a row. You have profit and loss statement, projections, balance sheets.

You really know your numbers and you know why the numbers are that way and that you have a good idea of what you want. You can't leave it. Investors, they don't have the kind of time to sit around and work up the deal. You need to bring to them, it's kind of like if you've ever watch "Shark Tank." On "Shark Tank," the entrepreneur brings the deal. If the investor doesn't like the deal, they're done. There's not a lot of back and forth, counter offer, offer, you need to know what you want.

Featured Coaching Excerpt - Notes & Transcript, Part 2
  • 11 Keys For Putting Your Best Foot Forward: 2) Company history
  • Lesson Nugget: Your personal history is just as telling of you as your industry history.
  • 11 Keys For Putting Your Best Foot Forward: 3) Industry analysis
  • 11 Keys For Putting Your Best Foot Forward: 4) Personal experience
  • Ask Yourself: How have I overcome adversity? How can I show this information in a way that adds value to investor presentations?
  • 11 Keys For Putting Your Best Foot Forward: 5) SWOT analysis
  • 11 Keys For Putting Your Best Foot Forward: 6) Investment proposal (know what you want)
  • Definition Magician: SWOT - A tool that identifies the strengths, weaknesses, opportunities, and threats of an organization.
  • Ask Yourself: Do I have clear plans for obtaining and using capital? What is the best way to write this down for investors to comprehend and be intrigued?

[MUSIC PLAYING]

 

-I think that's huge that the investors don't have the time. I just I want to, I know it seems hard to grasp this, if you're watching this business coaching lesson and you desperately need capital for your business. But these investors, a lot of the times, they invest in a lot of different businesses. And time is their biggest asset. A lot of times they have more money than time.

And they're saying, hey, I don't have time to factor in all the numbers. You need to do it, and then I'll just analyze whether it makes sense or not. And I just-- that concept has been hard for me to grasp as I've kind of, my journey from starting out, because it's an amazing thing, but a lot of investors really they look at what multiple deals a day.

SEAN KOUPLEN: Oh yeah.

-And so they just want to have a good idea of what you're offering there. Business coaching for company history. Sean, talk to me about why I should be talking about my company history as I'm putting my best foot forward.

-Well, we'll talk about whether you have an existing company or a new start up. On an existing company, your history just gives comfort about the fact that you'll be successful in the future. So talking about your history, I think, is important.

If it is a start up, then what you really need to talk about is your personal history in the industry and why you believe you can be successful. So why you have-- we recently invested in a start-up oil and gas processing firm, but the individual had been an executive at a very similar company, was bring an entire team with him, and so it just gave you great comfort that they should be able to move over here and do the same thing that they've been doing for years.

-So again, if it's an established business, show the company's history. If it's a new one, show your personal history.

SEAN KOUPLEN: Correct.

-Moving on to business coaching for point number three. Industry analysis. Sean, when you say industry analysis, break this down like fractions for us, my friend. What does this mean?

-You need to understand the industry that you are working in. So let me just give you two excellent examples. Let's take oil and gas versus the dry cleaning industry, OK? Oil and gas, if you're going into that industry, it's really on the rise for many reasons. We see it here in Oklahoma, oil prices are going up. Natural gas prices are starting to go up. That's a very positive, upwardly-moving industry.

The dry cleaning industry on the flip side, which I've also been in, is going in the opposite direction.

-Really?

-Yeah, people are dry cleaning their clothes less and less. More casual work. Oh yeah. So as you look, you need to know that as an investor, that you can still be successful in it. There are very successful dry cleaners, but it's a tougher industry because you're fighting against a negative trend.

-The dry cleaning business for you and me will never go down though.

-That's true.

-I'm always going to wear a tie. Are you always going to wear a tie?

-I'm always going to wear a tie.

-I might be the last American to wear a tie, but I'm always wearing a tie.

-I'll be right there with you.

-OK. All right. So now we're moving on to business coaching for point number four. Personal experience. Sean, I don't mean to get too personal, but personally speaking, what do you mean when you're talking about personal experience?

-This is really what we're talking about when we're talking about your track record and history individually. So what I want to know, and our friend Lee Cockerell just said this last week in a speech I heard him in. When you're hiring somebody or when you're investing in someone, what you want to know is how they have overcome adversity. That is the key.

We can all function when times are good. All of us. But who can take the punch to the gut and survive and make it to the late rounds? I mean, that's what we're looking for. So you need to portray that, and obstacles you've been through, experiences you've had, and why I need to invest in you.

-I love this. It's how they've overcome adversity. That's huge. I would have never thought about that. That's something you want to bring up. You want to share that with the investors when you're putting your best foot forward. Business coaching for point number five, SWOT analysis. Sean, are you talking about the special weapons and tactics group here? What are we talking about here?

[MUSIC PLAYING]

 

-That does sound like-- no, a different SWOT team. The SWOT in this case is strengths, weaknesses, opportunities and threats.

CLAY CLARK: OK.

-So literally, you're going through your business plan and you're going, here's our strengths. Here's why we think we are successful or can be, here's our weaknesses. Here's opportunities that we see in the market, and here are threats that could make us less successful.

And here's the deal. An investor or a banker, if you've gone through all of these things and down all of this, just the fact that you've done it is going to give you a leg up on 90% of the people that are coming in to apply.

-That's huge. I know we went through those quickly, but again, that's strengths, weaknesses, opportunities, and threats. Really just having a mastery of that information.

-Correct.

-All right. Moving on to business coaching for number six. Investment proposal. Know what you want. We talked about that earlier little bit.

-We did.

-But as far as the-- are you just saying at the end of the day, have an offer sheet page that says this is what I want or what should we have when it's all said and done?

-That's exactly what we should have. Basically what I need to know as an investor is how much you're looking for, how much equity you're willing to give up, what you think my return on investments going to be, and what kind of deal are you proposing?

Featured Coaching Excerpt - Notes & Transcript, Part 3
  • Lesson Nugget: Keep solid tabs on the telling numbers of your business and your industry and you can tell more about the promise of your future.
  • 11 Keys For Putting Your Best Foot Forward: 8) Highlight your personal equity injection
  • 11 Keys For Putting Your Best Foot Forward: 7) Understand the numbers
  • Lesson Nugget: Providing three years of tax returns establishes a great amount of trust for investors.
  • 8 Mistakes to avoid: 1) Lack of proven cash flow
  • 11 Keys For Putting Your Best Foot Forward: 10) Current balance sheet (business and personal)
  • 11 Keys For Putting Your Best Foot Forward: 11) Current year to date profit & loss (business)
  • 8 Mistakes to avoid: 2) Leaving minimal equity in the business
  • 11 Keys For Putting Your Best Foot Forward: 9) Three years tax return (business and personal)
  • Lesson Nugget: Leaving no money in your business will mean there will be no financial cushion if something goes wrong.

 

-OK. Now business coaching for number seven-- understand the numbers. Sean, when you're talking about understanding the numbers, what are we talking about here when we say understand the numbers.

-When you in particular-- when you're doing a start up and you're raising the money for it. A lot of times what people will do is, they'll go in and they'll prepare an Excel spreadsheet that gives their projected net income, and they'll just copy it forward and add 10%, 20% or 30% to it every year.

And the question becomes, why do you feel like you can do that? You know-- real life is not an Excel spreadsheet that we copy with the formula where we add 10%. Real life is tough with competition, and people trying to take your clients, and people challenges, and cash flow challenges.

So the question is, why did you put these certain numbers in here? And if you put them in here and you don't know why, you're not going to get the money.

-OK. Now business coaching for point number eight-- highlight your personal equity injection. It seems somewhat common sense, but I want to maybe clarify. If you're looking at a deal and you say, highlight your personal equity injection-- just maybe talk to me with a little more detail what that means.

-Yeah. Oftentimes it's not real clear the money that you've put into a company. And your example here is a great example, where you've basically brought-- many times you've brought in individuals that are working at a below market rate. You've put a lot of money into developing the company up to that point. But it's not as if you're just walking into the room with a check. These are things you've done over a long period of time.

So you need to portray-- as you've done very well-- to an investor what you have in the deal. And what you've put in the deal so that they realize that you believe in it, and you have risk in it just as much as they do.

-OK. Now business coaching for point number nine-- three years of tax returns, both business and personal. That's sort of a-- you just have to do it.

-Standard. Yeah, this is just very standard. But I would say you ought to have this both for a banker or an investor, because it just provides proof of your financial performance. People are not going lie on their taxes, because they don't want to pay more taxes than they have to.

-Yeah.

-So if you see a profit shown and good gross revenue numbers shown on a tax return, it's the real deal. Anybody can type up a P&L and make it look great, but taxes are real and there are huge consequences for being dishonest on taxes.

-If you want to find an example of what not to do with your taxes, just Google Isley brothers or Wesley Snipes. And you can find some great examples there. It would be a great way to-- OK.

Now business coaching for point number 10-- the current balance sheet. Business and personal. Sean, what else should be included in the business and personal balance sheet?

-So a balance sheet is a listing of all of the things that you own, and all of the things that you owe. And you subtract the two to come up with a net worth.

-OK.

-So what a balance sheet shows is that both personally and business wise, what are the assets you have, and what are the things that you owe on. And it just gives the investor or banker a good snapshot of where you are right now.

-We're going to go ahead and put a little graphic on the screen right now just so you can get some clarity with this. But that's all the things you own versus all the things that you owe. And that's going to determine your net worth. That's basically a simplified version of that.

Now business coaching for point number 11-- your current year to date profit and loss. Illustrate for us, my friend, what you're talking about here.

-Well, we talked about having three years' tax returns under point number nine. The year to date P&L is just saying how you've done this year. So it's giving a very recent financial picture of how your business is doing right now, because that's not going to be captured. Tax returns are only at your fiscal year end. So we want to see how you're doing right now.

-OK. Now we're moving on here. This is the final business coaching segment of this good stuff we want to cover to help you raise capital in a challenging economy. If you're somebody who's thinking, man, this economy's challenging-- this is for you.

So we're talking about the eight mistakes to avoid here. So we'll go through them. Mistake number one. Lack of proven cash flow. Sean, what does it mean to have lack of a proven cash flow?

-Well, it just means you don't have any business history. You haven't done business; you haven't made money. You just don't-- your business model is not proven.

This doesn't mean that you can't get money. As I've already mentioned, you can. It just makes it more challenging if you don't have a proven history.

Ideally the way that it would work is you start up a business with your own money and friends and family money. And you prove it up for at least a year. And then you're able to go get investment because you've shown what you can do. So that's what we're talking about here.

-Now mistake number two-- leaving minimal equity in the business. Sean, what does it mean to leave minimal equity in the business?

-This is a very important one for businesses that are trying to bring in investors or bank capital to grow. OK, so if you have an existing business and as you've made money you've pulled it all out-- you made a million dollars last year, you pulled out a million dollars and went and bought cars, boats, big home, et cetera. What that shows is that you now have no cushion left in that business if something were to go wrong.

This happened a lot back in, oh, 2008, 2009, and 2010. Business had been doing very well. Business owners pulled all the money out-- lived high on it. And then when times got very difficult, they didn't have any cash or paid for assets in the business to help them get through.

So the reason this is important both to a banker or to an investor is we want to know that the business comes first, and you personally come second. We don't want somebody that's going to suck all the cash out of the business and just leave it flailing.

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