Cornerstone Capital Lending

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Your Guide to Lending and Financing Terminology  - Cornerstone Capital Lending

It’s important to secure the best type of financing to suit your business goals—but that’s impossible to do if you don’t understand the language of the industry. We’re here to break down some of the industry-specific terms, so you don’t have to decipher the lending jargon and can focus on what really matters: the future …

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Ready to Scale Your Small Business? Here’s What You Need to Know

Your business has a solid client base. You’re making a good profit. In short, you’ve got a foundation in place—and you’re ready to use it as a launching pad. But how do you plan your blast off?

 Every business is different. However, there are just some things considered hallmarks of a solid growth plan: SMART goals, top talent, thorough research, analytics and, of course, the right kind of funding. Here’s a quick checklist for any business considering a scaling strategy.

 Create a team of strong players

 A successful business may start with the ideas and work of one person, but no single entrepreneur can expand their business alone. Gather a team of talented and like-minded individuals who have the skills and passion to move your business in the right direction. Treat each new hire as an investment. Leaders who know how to delegate tasks appropriately can get more done than leaders who micromanage or insist on doing everything themselves.  

 Set SMART expectations for your team and your business

 Do not be afraid to push the limits. Goals should be realistic, but if you play it safe, you may not reach your full potential. If you set high expectations for your team, you will motivate them to push further and achieve more. And remember to let your team have fun as they work toward those goals. According to one major study, enjoyment—yes, enjoying the process of achieving your goals—predicted progress toward reaching the finish line more than any other factor.  

 What expectations are too high? The results can be found in market research. Is the market booming, or will you face challenges securing a spot in a competitive industry? What can your team realistically deliver based on their abilities, knowledge, and connections within the market? The answers to these questions should shape the goals you set, as should the SMART goal framework. To set your business up for success, set goals that are Specific, Measurable, Attainable, Relevant and Time-Bound.

 Do your research and dig into the data

 Does the market actually want what you’re selling? If they do, where are they looking for solutions? Craft your growth strategy based on market research and trends in your industry. Consumers have more control than ever on how they make purchase decisions—and more places than ever to find new products. Let the market lead the way.

 But don’t go on autopilot once you’ve proven a solid market fit. Instead, continue your market research as your business grows. Proper data collection will give you and your team a solid idea of what strategies are working and where you should continue to invest your resources. Top-growth businesses often attribute their success to data and analytics that provide evidence of what strategies do and do not drive business in specific markets. Analytics isn’t sexy, and it often feels like grunt work. But remember, what gets measured gets done.

 Get funding that matches your growth goals

 Growing a business requires funding, but not all funding is created equal. (Believe us, after years in corporate finance, we can attest to the value in choosing the right funding from the right lender at the right time). Do you know what type of funding is right for your business?

 Expansion looks different depending on where you want to take your business. Will your business build new facilities? Construction loans may be more suitable for your growth. Does your RV or auto business need to purchase more equipment to help you succeed? In that case, SBA loans could be a good choice for you. When you find the right type of funding, you can be more flexible with your investments without the stress of repaying the loan too soon.

 Ready to secure the funding that will help your business succeed? Contact Cornerstone Capital Lending for more information about how SBA, USDA and conventional loans can help your business meet its growth goals.

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Top Financial Mistakes Entrepreneurs Make, And How to Avoid Them

Businesses need funding to launch and survive. That fact is simple enough, but securing that capital can be anything but easy. A majority of startups tend to bootstrap it, digging into personal savings or their network to fund their ideas. But for some entrepreneurs, that funding doesn’t always provide enough capital—or immediate availability—to let them truly seize opportunities for growth. 

Entrepreneurs are undeniably go-getters. But as a VP at Cornerstone Capital Lending, I’ve seen and heard the same thing from many of them over the last few years. They wish they’d known then what they know now. 

Business often means being prepared for the unforeseen challenges along the way. The few who are able to stay the course through the rough turns become part of the small group of businesses that survive past the first few years. But with a 9 out of 10 failure rate for new ventures, many will never see what was just around the corner.

 Here are some of the top financial mistakes entrepreneurs make—and how to avoid them. 

Hiring too soon

One of the biggest mistakes entrepreneurs tend to make is going on a hiring spree too early on. Keep in mind that 40 percent of small businesses are profitable, while 30 percent break even. The rest keep losing their money due to poor budgeting or cash flow monitoring. 

· Avoiding the pitfall

Just because you’ve opened your doors for business doesn’t mean you should hire right away. Before you go all out to hire a full staff for your newly launched business, make sure new clients are translating into revenue. Once the revenue is flowing into the company, start to hire team members for the roles you really need filled at the early stage. Extra staff members who don’t have a driving role in the company are an extra overhead you probably don’t need at this stage.

 Over-borrowing

The National Small Business Association (NSBA) revealed that 27% of businesses aren’t able to receive the capital they need to launch or gain traction.

So if a bank finally agrees to fund them, it can seem too good to be true, and make it more likely that they’ll take out a large loan that they don’t really need. But this is a dangerous move, because interest can add up quickly. If the borrowed amount isn’t being put to direct use to grow your business, it’s simply a drain on your profits.

 · Avoiding the pitfall

Know your financial need and work with a lender to find the best rates and SBA (Small Business Association) loans to meet them. This can save you a lot in high interest payments—and headaches.

 Not paying attention to cashflow

It’s well known that 9 out of 10 startups fail. But a lesser-known fact is that poor cash flow has been the demise of 82% of those that go under. It’s vital to monitor your cash flow and account to know where your dollars are going (and coming from, too).

 · Avoiding the pitfall

To keep your incoming cash flow solid, know your value and price your products and services accordingly. Low margins and high overhead are a quick way to bring your company to an end. Keep an eye turned to your cash flow throughout the year, instead of being hit by an unpleasant surprise down the road.

 Going it alone

Entrepreneurs are a unique breed of tenacious people driven to succeed. Full of ideas and dreams, they often have a vision for where they are going and how they will get there. Often though, whether to save money or because they want a hand in every aspect of their business, they may forego professional financial advice. But the Global Entrepreneurship Report revealed a tough reality: more than 50% of businesses shut down because they lack profits or funding.

 · Avoiding the pitfall

Having a financial team around you for accounting, legal and lending consultations can make the whole process of launching and growing a profitable business easier.

 Under-capitalization

Innovative ideas don’t equal success. The facts stand that businesses need adequate funding to grow and be able to compete with more established companies. When starting out, many business owners don’t realize just how much capital launching and running a business really takes. Nearly 30% find it a challenge to cut back on their operating costs to keep costs down, and 25% don’t have extra capital in place in the event of unforeseen circumstances. Without proper funding, business owners are prone to falter when the unforeseen happens—and in new businesses, that’s pretty certain. With that 90% business failure rate for new startups, faltering cannot be an option.

 · Avoiding the pitfall

In 2015, 73% of small businesses tapped into additional financing. Yet for the small business owner, it can be a challenge to get funding through traditional banking means. By teaming up with a lending expert that works directly with the SBA to secure loans on their behalf, business owners can get the capital they need to launch and succeed.

 Small businesses are the backbone of America. But many will fail before they’ve had a chance because they don’t have a clear sense of the financial landscape and what it really takes to power a business. Learning financial lessons early on and taking those lessons to the bank (or rather, a lender) can help small business owners achieve their goals in the fastest, most viable way.