It Takes Money to Make Money


In Part 2 of his conversation with Renee Hode from CPCC, Andrew digs deeper into where businesses can find funding and loan opportunities in Charlotte.

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Andrew Bowen: (AB)     Renee Hode: (RH)

AB – Welcome back, entrepreneurs. We’re glad to have you back for another episode of CBR’s B2U podcast, bringing business directly to you. Presented by CBRbiz.com. As always, our goal is to connect you to the information you need to start and run a successful business.

Today, we are continuing our three-part discussion with Renee Hode from Central Piedmont Community College (CPCC), who runs the CPCC Small Business Center. Last time, we asked her how to know if our small business ideas will be lucrative and make money. If you missed it, we urge you to find Part 1 at CBRbiz.com

Welcome back, Renee—thanks again for being here.

RH – It’s good to be back. I look forward to talking more with you today about some funding options for small businesses.

AB – We’ve discussed if our business will actually make money. But the next question when it comes to making money is this: Some say, “It takes money to make money.” Where do people get the funding to start the business so they can actually go down that path?

RH – There are a lot of different options out there available for folks that are looking to start a business. It’s really going to be dependent upon what type of business they’re starting and what level of capital they need to move the business forward. One of the best things that we do is to work with clients to take their big idea and scale it down, so that they can find their minimal, viable product. From there, they can get the product out to market by way of bootstrapping.

AB – So, you say bootstrapping, and I remember people would say they “reach down and pull up their bootstraps.” Is that really what that is—people just dredging it out?

RH – One of the first things is tapping friends and family. Do you have a rich uncle out there that maybe has some spare cash and can help back your business? That’s the type of place we ask people to initially start when they’re looking for finance. But just because you may have a rich uncle doesn’t mean that they’re just going to write you a check. There’s still that need when you’re borrowing even from friends and family to go ahead and put together a business plan so that you are able to show cash flow projections and that you’re going to be able to get a return on their investment.

AB – That makes a lot of sense, Renee. Nobody wants to fund an idea if they’re not sure the person they’re funding has done all the background research. It sounds like this is really building on top of itself. Somebody has this big idea, then they come to someone like you at the CPCC Small Business Center to ask if you can help them decide if their idea will really make money and for help with a business plan and then they get the funding started. That makes complete sense, no matter if you’re looking to go to Bank of America for a huge loan, or to Uncle Sam… not Uncle Sam the government but your rich Uncle Sam who might fund you 20 or 30 thousand dollars…

RH – There are other funding options available. You mentioned a bank loan; certainly that is an option for individuals as well. Looking at that, we’ll walk them through the process of going to get a bank loan, make sure again that they have those financials in place, but do they also have collateral? There’s risk in taking out a loan, so individuals will need to put up some form of collateral—maybe that’s their house, that’s their car, and then can they move forward with that type of a risk. So then it’s something they need to internalize themselves. The banker will also look at something called “the 5 C’s”. Do you have the capacity to pay back the loan? What type of collateral do you have to guarantee the loan? They’ll look at the person’s character, conditions surrounding the loan, and ultimately how much capital is needed.

AB –Renee, thank you for telling us about the five C’s when it comes to business, but are there alternative ways of getting funding and financing? I’ve seen a lot of things on Kickstarter or Indiegogo and other crowdfunding sites. What’s the possibility there?  

RH – Crowdfunding sites like Kickstarter or Indiegogo are reward-based meaning that the business is given a reward in regard to receiving that funding. There are also equity-based models in crowdfunding, which allow companies to raise money by giving up a share of the business—this would not be the Kickstarters or Indiegogos of the world, but it’s definitely another option for small businesses. You also mentioned something about grants. That is a terrific question because that’s probably one of the number one ways individuals think they’re going to get funding. They think there’s all this free money out there and that it’s available for them for a startup business. I hate to tell you, Andrew, but this is not the case. The free dollars from the government—they don’t exist. The grants that are available focus on scientific or research-oriented fields, or they’re for existing non-profits that are really looking to increase capacity of their services. But for your coin laundry or your retail store on downtown Main Street, the grant opportunities are limited.

AB – Since grants are out, maybe just as a recap, we’re looking at bootstrapping, rich uncle, bank loans—what did I miss?

RH – Credit cards are also an option, but I would say that with hesitation because you can build up debt very quickly; it could be detrimental to a business owner’s credit, but it is an option used by some of our startups to get going.

AB – That’s great as long as people are responsible with credit card, right?

RH – Yes.

AB – Our time is up for today. Renee, we can’t thank you enough for being here to share your insight with our listeners. If you want to learn more starting and funding your own business, visit CBRbiz.com, or follow us on Twitter @CBRbiz. Stay tuned for the third and final part of our conversation with Renee, where we’ll be talking about the importance of having a business plan. Thanks again for tuning into CBR’s B2U podcast, bringing business directly to you. Presented by CBRbiz.com. Until next time, we mean business.


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