I just attended a workshop put on by the Valley Economic Development Council (VEDC) called Where’s The Money. Over 400 business owners attended and were eager to learn what it takes to keep thriving despite the current economic situation. It was record attendance, and featured LA City Controller Wendy Gruel and Roy Salter from the Salter Group. The event was sponsored by Wells Fargo, as well as other banks, chambers, etc. Rooms were set up for business owners to apply for loans and receive consultations.
Unfortunately, the reality is, that only a small portion of the participants will receive funding. One reason is, credit scores. With more and more people losing homes and declaring bankruptcy, it makes it impossible to qualify.
So what is an entrepreneur to do if they want to raise capital? Sometimes they need to look for alternative methods such as angel investor groups. Instead of bearing all the risk of losing your investment if you finance your business from your own pocket, an angel investor shares the risk with you. The downside . . . you share some of the control of your business with your investors. Many angel investors want to see that you put in some of your own money first and that you were successful in doing so before they will consider funding you.
Roy Salter, of the Salter Group, who has raised 100 Billion + teaching entertainment, media, biotech and fortune 500 companies to be understood when it comes to raising money, offered this advice:
You don’t have to let an investor take 1/3 of your company. Instead insist on keeping your income and paying a return on investment (ROI) on your true profit (after taking your regular income) Or, you could not take the money and stay where you are.
He also recommends that if you cannot speak for yourself and articulate what you want, don’t go out to seek funding. The language of raising capital is crucial.
One workshop dealt with building your credit scores. Keep business credit separate from your personal credit. To start building your business credit, apply for vendor lines such as Office Depot or other suppliers. Ideally you will want to have:
- 5 Vendor Lines of credit
- 3 revolving credit cards – Visa – MC – AMEX (get the vendor lines first)
- 1 large bank loan
When applying, do not include your social security number. Use your business tax ID. Also, use a post office box for your address. Incorporate.
Apply for your Dunn and Bradstreet number. This is very important. Keep up with it.
For personal credit:
There are 26 items you can dispute on your credit report. Do not pay someone to repair your credit. You can easily do it yourself. To achieve a perfect 850 Score you must have:
- A mortgage
- 3 credit cards – Visa – MC – AMEX 5 max
- 1 installment loan such as a car.
Work to repair:
- Delinquencies (35%) (late fees, judgments, bankruptcies, foreclosure)
- Revolving credit – Do not exceed 30% of credit line
- History of Credit 15% (if you cancel credit cards do it only if they are less than 12 months old, otherwise, keep the cards and only use them once per month and pay off each month – buy gas)
- Mixture of Credit 10%
- Inquiries – 10%
If you are looking to raise capital and want to try alternative methods, besides bank loans, make sure to check out CEOSpace. 1/3 of the participants at our business networking forums are investors. We also teach you the language of raising capital. Call Rebecca at 818-515-7880 for more info.
About Rebecca Olkowski
I'm a 30 + year voice over actor, blogger, WordPress Blog Consultant and a gal who loves to have fun. I'm on a mission to travel the world in style. Can you give me a lift?
