There is a famous Southern joke which goes something like this…
Question: Why do Southern guys go to family reunions?
Answer: To meet chicks.
Being a Southerner from Mississippi I suppose I should be offended by this, but the former banker in me says that besides meeting chicks, enjoying great home cooking like fried chicken, hush puppies (not the shoes) and black-eyed peas (not the singing group, although I do listen to them), there is another very important reason for going to family reunions….money!
For almost 35 years, I have been helping entrepreneurs finance their great ideas. And the No. 1 place to finance a fledging business is family and friends, especially that eccentric relative who normally drives the worst looking and oldest car to the reunion but is flush with cash! They’re usually disgruntled and not speaking to anyone in their immediate family because most of them have been disappointments and haven’t amounted to much.
I’m always amused at how the ads on television and social media sites make it appear that if you walk into a bank with a great business plan, the cash drawers pop open. But the truth is, most start-ups or businesses with fewer than five years of revenues have a very difficult time obtaining financing. Normally, until they can show several years of positive cash flow, most entrepreneurs first count on family and friends for financing. And then they move on to personal credit cards or home equity lines of credit.
If a business makes it to the five-year mark in the black, doors often begin to open. Banks begin to know your name and battle over your business’s account. Other types of lending also become available to you. Once a business reaches this point, UPS Capital can offer some good short-term and longer-term working capital solutions that work in conjunction with transportation and financing of the company’s inventory.
I’ll be blogging from time to time, so stay tuned for more fine Southern humor and financing tips.
|Tags:||entrepreneurs, finance, small business, UPS Capital|