I’m here today with Sue Malone, owner of Strategies for Small Business.
Jenny: Sue, what’s the background that led you to starting your company?
Sue: I started during 2001-2002. Several years prior, I had tried to get a loan for my own business and could not. It was very difficult at the time I started my business for small businesses to get access to uncollateralized working capital for under $25,000. The banks weren’t interested—no one thought small businesses needed it.
With my own experience coupled with the lack of resources for small businesses, I thought there had to be another way.
I found the Director for the Small Business Administration (SBA) in San Francisco who also saw the need and partnered with them to offer these types of loans. Today, I am licensed in all 50 states!
Jenny: What do people need to know about getting a loan in today’s climate?
Sue: It’s there—it takes a bit longer, but it’s there. And, it often takes 2-3 vehicles to get the whole package of funding that you want, which includes the SBA loan.
Jenny: What makes you different in the market and from banks?
Sue: We are a licensed, SBA lender—this is all we do and we know our niche really well. We’ve got the background to facilitate these loans and since it’s our sole focus, we don’t upsell.
Jenny: I imagine the banks love you—that you’ve got a great relationship with them.
Sue: Yes, because we don’t compete. We bring them business that they want—checking accounts, etc. and they supply us with lots of referrals. Over the past 10 years, I’ve done 41,000 loans and 33.5% came from banks as referrals.
The banks don’t want to do these kind of lower priced loans as they are a higher risk and costly.
Jenny: I know that one aspect of your business is funding marketing plans. Why did you get into that?
Sue: Because you can have the best business but if you don’t have clients, what do you have? Marketing is the most important item. It is huge and this is where most companies fail because it’s the first place many of them cut when things are tough financially. In fact, it is the last thing you should cut.
Jenny: Why do you think companies panic so much and make cuts in marketing?
Sue: Because it’s expensive and they think they can’t afford it but it’s just the opposite! Find something else to cut. Many of the businesses that continued to market during our latest recession are still in business. Many of those who cut or stopped the marketing funding are no longer in business or are having a hard time right now financially.
Jenny: What are your main criteria for small business funding?
Sue: I work with start-ups and small businesses all the time. For the loans I help them with, they don’t necessarily have to have been in business for two years, which is still a typical bank criteria. They do, however, have to show the capacity to pay a loan back, including showing that they can cover the debt once the business is up and running. And, that they’ve got some kind of background in the business they are starting.
Jenny: What are the keys components you look for when someone wants to fund their marketing plan?
Sue: The business needs to show that they:
1. Realize there is competition to their products and/or services in the market place. Many businesses come to me and tell me there is no competition for what they do. There is and they need to demonstrate that they understand it.
2. Have 3-4 different plans of attack to reach their market.
3. Created a plan that is reasonably priced. Can they afford it? It takes six months to build traction and then sustain the marketing effort. Can they get through the traction phase and then continue to sustain?
Jenny: What are the top two misconceptions about getting money now?
1. People come to me and say they’ve just left their job and want a loan to cover, for example, their $150K salary. They expect a loan to cover that for them.
2. Businesses who say they want as much money as they can possibly get. I understand why they’d feel that way but they must be realistic or else they’ll fail and be even farther behind the 8 ball. The best thing to do is get the loan, establish cash flow and then take on a bit more debt if needed. The ones that build too fast have the issues—they may have a great business and a highly popular product but if they can’t fulfill orders, they will fail.
Jenny: Any final comments you’d like to make to our readers?
Sue: There has never been a better time to start a business. It’s less costly, due to the low cost and free marketing available. There are advances and innovations in the market now like 3-D printing that have greatly reduced the cost of things like prototyping. With 3-D printers, for example, you can get a product sample made quickly and relatively inexpensively and then do a test market.
Jenny: Sue, thank you for your time to give us your expertise and advice on funding for start-ups and small businesses.
Sue: Thank you, Jenny.