Funding Sources are looking for transactions that offer them an adequate rate of return on the money they invest in quality transactions. Clients are looking for funding that will assist them grow their business allowing them to make more profit. Match the two and you have a good transaction.
Simple enough - right????
There are literally millions of people looking for funding. On the Internet a person can find millions of web sites offering funding services. All of us are constrained by the number of hours in a day, so we need to work with deals that have the highest potential of closing. We don’t have time to look at the millions of potentials. We need realistic deals, cooperative clients, and deals based on sound financial reasoning. We don’t need sales hype and blue sky promises.
The biggest mistake most Financial Consultants make is they chase deals and waste time on transactions that will never close. With the right process, these deals could be quickly eliminated. The biggest mistake Clients make is thinking that they can receive millions in funding with sales hype, instead of proving the financial soundness of their transaction.
How do you qualify a potential business loan or venture capital deal?
The Project Corporation uses a simple system to quickly qualify prospects. Clients provide an
Executive Summary that provides clear and concise information to specific questions, in a one page format that a person can quickly read.
How the Client answers the questions, if they skip questions, or if they provide vague
answers reveals a lot. Due to time constraints someone, reviewing an Executive Summary is going to make quick decisions based on the information provided.
Do you expect to get a job when you have a sloppy or incomplete Resume? Then should you expect to receive millions in business loans or venture capital when inadequate information is provided? I am amazed everyday at how many people are looking for funding, but are unable to provide adequate information even on the very basic questions that are initially asked. (Questions get tougher as the funding process advances.)
Other Clients decide that they don’t have time to answer questions. Instead they blast out their sales pitch, which doesn’t provide the basic answers all Funders need. This type of Client thinks they can hard sale the deal, and control the funding process. It doesn’t happen.
Along with the Executive Summary a current Balance Sheet should be submitted, providing the company’s financial position within the past 30 days. This is an extremely important document for the Client to provide.
Many Clients provide the Executive Summary, but don’t provide the Balance Sheet. Of course the immediate thought is the company isn’t in good a financial position and they are trying to hide that fact until they find a Funder. If the company’s financials are in poor shape, it is going to be found out. If there are skeletons in the closet, open the door and reveal them. Many lenders and investors are willing to deal with many issues when they are told up front. If a Client starts the relationship by lying and hiding the truth, does anybody really think there is going to be a good out come?
By using a Qualifying Process transactions are quickly qualified, or eliminated. At The Project Corporation, we call them “5 Minute Deals.” Not because deals are funded in 5 minutes, but rather the information is quickly reviewed and the Client will have either provided quality information, or not. They therefore qualify for the next step, or they are eliminated as a potential. We don’t waste more than 5 minutes on a deal that is not going to move forward.
Other sources have their own process of qualifying deals. You can be certain that all Funding Sources are busy and they are not going to have their valuable time wasted.
There are literally millions of deals available, but time is limited. Therefore, the biggest tip we can reveal in this month’s Business Funding Secrets is to provide quality information starting with the initial contact.
After the American Cash Flow Convention held during the month of May each year, there is a large influx of new Consultants chasing finance transactions. We welcome all of you to the finance community.
Along with the new Consultants we see an increase in the number of deals being presented. However, we also see a tremendous number of Consultants who are chasing bad deals, communicating ineffectively, or are uncertain about the process. Anyone entering a new field is going to have uncertainties and will make mistakes. This is expected and acceptable. If you have questions or challenges send me an e-mail, or give me a call.
Some do’s and don’ts for new Consultants:
1. Do not sit there and expect your phone to ring. Pickup the phone and call a prospect.
2. Have a plan for marketing your new business.
3. Target your marketing.
4. Follow through.
5. Even if all you have found so far are bad deals, learn from them. Why are they bad? What marketing are you doing where you only find bad deals? How can you improve?
6. Read something about finance every day.
7. Talk with your Funders and learn the qualifiers they are looking for.
8. Don’t waste time with deals that won’t close.
9. Don’t waste time with a Client that won’t provide the required data.
10. When you have a prospect, and you are going to e-mail a Funder, do not type “Hi” or anything like that in the subject line. They don’t know you. Communicate professionally.
Don’t type, “Income Opportunity.” Funders are not interested in joining a multi-level marketing businesses.
You can type “Funding Request,” or “Broker Info Request,” or something that will catch their eye so they know it is business related and will open the e-mail.
As you know, many e-mails are filtered to the Junk E-mail. If you don’t hear back from a Funder, it is likely they never read your e-mail. Don’t get upset, or take it personally. Funders get hundreds if not thousands of e-mails every day. It would be to your benefit to call them first. Introduce yourself and let them know you have sent them a Funding Request.
11. Don’t be afraid to talk with people - Prospects and Funders.
12. Learn, learn, learn.
The Project Corporation wishes you great success in your new business.