Raising Money: You Can’t Look At Interest Rates

Mike Sowinski, owner of CFO Consultants in Asheville, gives his best advice for raising money, which is that you can't look at interest rates — period. Access to capital is always a prevalent thing. The more you grow your business, the more money you need for your business, and no matter what, you're going to have tough situations when it comes to getting money from bankers and investors. Sowinksi says you can't look at the interest rates. You don't want to get in a bad situation, but once you know people will invest in you, you need to go for it.

One of the things I had a real problem with at the beginning and in the middle and the growing phase was access to capital is always a prevalent thing. The more that you grow, the more you need, because in any business, you have accounts receivable or people that owe you money and you need to finance those things. And even today, bankers are very hesitant for whatever reason, they'll pick a reason. There's economy, there's a problem with that particular industry, there's a problem with real estate, they don't like this particular asset or whatever. And so bankers, that's their job to say no but what you can do is find people around you that say yes to whatever it is that you need to do. And there are people out there they will say yes and they'll give you the chance and they'll give you the capital. And now I'm one of those that give other people capital in order to grow, in order to do what they're doing. If you have a good idea and a good product it's a no-brainer for someone that's not a bank that will invest in you. But the one thing you have to get over and I have a lot of clients that have this problem, I just had this discussion yesterday, they don't want to pay more than X for the money. Well, that's not the way to look at it. I have one client that pays 20% for interest on his money but he makes 45 on $10 million. So is he right? Yes, he's right, of course, because he's making 20% on money he wouldn't have gotten anyway. But anyone would invest in his company 'cause they make 20%, of course, you do that. And so it's good all the way around for him in his particular situation. So you can't look at interest rates, you just simply can't when you're looking at how to grow your business with regard to capital and access to capital, you can't look at interest rates. It's not the right way to look at it necessarily. You don't want to get in the wrong situation but you have to be careful with that monthly payment be able to make it and not just chance it all on something that isn't gonna work. But once you know it's gonna work, then people will invest in you, that's the point.

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