Alex Nelson is a Pregame Guest Expert and the CEO of Impact Capital Management LLC, working with business owners to secure the right funding for their startup needs.
Join Alex this month at The Finance Five, our April business finance workshop on April 30 at Pregame HQ.
>more info & sign up
What was the motivation for your recent career move?
My desire to work closely with borrowers who are traditionally ignored by the commercial and investment banking communities stems from my personal experience being an entrepreneur that struggled to raise capital. I have walked the same path as many small business owners, and I want to help them navigate that road with more efficiency and financial strength than they could on their own.
Who has had an impact on your business?
My mentors and advisors have made the largest impact on my business. They have helped me make key business decisions and shaped my efforts to reach out to communities I want to help.
What are the top financial factors that someone should consider before starting a business?
Financing the business is the most important issue businesses face after they have established the business and their product or service. Growth always takes capital, and most business owners have to obtain that capital from an outside source. We specialize in helping entrepreneurs assemble a plan that will impress any reader, and speed up the process of obtaining the capital needed to grow.
What do early entrepreneurs often miss in their financial plan?
A strong grasp of the flow of capital through the business cycle is the most widely ignored part of a business plan. Many entrepreneurs are good at predicting their sales, but not so good at estimating expenses over a period of time, especially in a strong growth period. Working capital needed for most growing businesses is largely underestimated, and that can have catastrophic consequences.
What are the financial numbers a business owner should always know?
Working capital is the most important number. Available working capital is more than just enough dollars in the bank account to meet monthly expenses.
What are the factors to consider when deciding on a loan vs investor?
Capital is very difficult to obtain, especially for a startup company. Loans are almost never available to startups. Equity capital is also very expensive. Choosing the right kind of funding source is always a balancing act between long term ownership goals and short term growth goals.
In your experience, are entrepreneurs as risk-tolerant as their stereotype?
Entrepreneurs, in my experience, are far more risk-tolerant than the average non-entrepreneur. They have to be, or they would never succeed. Many entrepreneurs leverage their life savings, their homes, and meaningful relationships with friends and family to chase their business dreams. All of that is extremely risky in many ways.
Do you ever see people’s attitudes around money get in the way of their business?
Not as often as you would think. Most entrepreneurs I meet are very responsible with money. At times, the thought of growing rapidly is enticing, as the business owner recognizes the opportunity to gain a better quality of life through increased personal wealth, as well as provide better wages, benefits and quality of life for their employees. It is rare that I meet an entrepreneur who places their own personal greed over that of their staff. Small businesses and corporations in the United States spend a great deal of time and money to take care of their employees, their customers, and the environment. Unfortunately, the few that do not make the front pages of our news outlets, which really hurts the business world because the vast majority are doing everything in their power to be responsible corporate citizens.
Any “Never do this!!” advice?
Never accept funding from a source that you do not personally know or have a relationship with. There are way too many bad actors, especially in the Merchant Cash Advance world. Those kinds of loans are shady, and will eat up any business’s profits literally overnight. Also, never go without appropriate advice from a qualified CPA and bookkeeper. Most business owners do not have enough time in the day to run their business and keep excellent books. It is worth every penny to have the right people helping you manage your finances.