Slow and Steady Wins the Race?
There are myriad options for small business financing, you simply need to know where to look
This morning I stumbled upon an article by Ami Kassar on Inc.com. He suggests, “The entrepreneurial ecosystem is dotted with ambitious go-getters itching to follow in the footsteps of the Facebooks and Googles of the world—creating fast-growing, fast-flying companies with large numbers of early adopters. I like to call these hopefuls hare entrepreneurs, as the race to produce and succeed is done at a fast and furious pace. But, the truth is, the majority of successful entrepreneurs are tortoise entrepreneurs—those who are growing businesses slowly and steadily.”
This is particularly true for the Main Street businesses most of us identify as small businesses. The local restaurants, dry cleaners, and auto mechanics we trust to keep our shirts pressed, or cars running, and our stomachs full. Unlike a sexy tech startup of the likes of Facebook or Google, they will likely never attract the type of equity investment a new tech company might attract to exponentially ramp up growth. Although I agree with how Kassar describes what he calls “tortoise” and “hare” entrepreneurs, I don’t think it’s as much a matter of whether or not they’re a “go-getter” or not, but more a matter of the type of business they’re in and whether or not it’s able to scale at a level a VC or angel would be interested in.
Most Main Street businesses grow with cash flow or borrowed capital.
Growing up in a small business family, I cut my entrepreneurial teeth sweeping the warehouse floor and driving the delivery truck for my Dad’s industrial supply business. Although his business would have never been the kind of business a VC would have funneled millions of dollars into (in fact a $40,000 small business loan was a huge loan to him), he thought of himself as a “go-getter” striving to get ahead. In fact, he was one of the hardest working and most ambitious men I’ve ever known—his business just wasn’t a tech company.
Since those early days I’ve spent the 35+ years of my career working in small business. Some of those years were spent in Main Street businesses with fewer than eight or ten employees along with a software company of more than 250 employees and revenues of around $30 million—I’ve even owned a business or two myself. They were all considered small businesses, but they all experienced different financing needs.
One or two had access to equity investors, but most relied on cash flow or borrowed money to fund working capital and fuel growth. It’s tempting to think the entrepreneurs who find success on the Shark Tank are the really successful businesses, but I’m a fan of the business owners on Main Street who spend their lives building businesses they can hopefully pass down to the next generation, create life-long relationships with customers, and contribute to the economic viability of their communities.
To that end we talk about what small business owners can do to improve the odds of success when applying for a loan and discuss the many options available for a small business owner to finance their small business. I’d love to hear about what you’re doing to successfully fund your company’s growth initiatives.