Jim Blasingame

Business futurist, award-winning author, speaker and columnist

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Banking

The special sauce created by small business and community banks

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America is fortunate to have two marketplace sectors that also happen to be unique in the world: 28 million small businesses and 5,000 community banks. Let me tell you a story about why we’re all even more fortunate – especially during a pandemic – that these two groups are next-door neighbors and close friends.

There are many differences between a small business and a big business. But the most dramatic is something you won’t find on Wall Street: small business special sauce. When this rich blend of ethics, values, and value is slathered over Main Street America, it manifests as one of the most powerful forces in nature: high-quality, enduring relationships built on a foundation of trust. 

And these aren’t like your affinity for a big business brand or product – they’re old-school relationships between human beings operating in a new-school marketplace. 

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The Paycheck Protection Program and your small business

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The coronavirus pandemic has thrust Main Street America into a very challenging and unprecedented economic period.

Most businesses have been negatively impacted and millions are in peril. Every owner is justified in their concern for the next few months.

But it’s important to remember that we’re dealing with a global pandemic like no living person has ever experienced, which has caused an economic crisis, the abruptness of which no living person has ever seen. As I said last week – this isn’t your fault. And once we “flatten the curve” of the coronavirus, there’s every reason to believe the economy will return to the growth footing we knew only a few weeks ago.

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Will government help for small business be fast enough?

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The national response to the coronavirus pandemic – however necessary – is crushing Main Street.

This economic tsunami wasn’t caused by market animal spirits, irrational exuberance, bad business practices, or bolloxed supply chains. In the span of a month, an invisible Black Swan took us from robust to shut down. It’s not your fault, small business owner. You didn’t cause this.

That’s why you’re going to hear me say something I’ve never said to the government before. Instead of “Get out of our way,” today I’m saying, “You must step up and step in.”

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Searching for investor capital? Don’t make these mistakes – Part 2

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This is the second article in a two-part series on how to maximize your chances of success when approaching an investor for your business.

Last time, I pointed out one of the modern marketplace myths mouthed by talking heads and politicians, which is that small businesses don’t have enough access to capital. You could write a book about what these people don’t know about small business and, as it turns out, Andrew Sherman did.

Andrew is my friend and long-time member of the Brain Trust of my radio program, and his important book, Raising Capital, reveals, among many other things, the common mistakes entrepreneurs make when searching for investor capital. So far in this series, I’ve revealed six of the mistakes on Andrew’s handy list. This time we’ll cover the other six, each followed by my commentary. To see the first article, search for this title with “Part 1.”

The good news for seekers of investment capital is that outside sources have become more robust and multi-faceted, whether from venture capital funds, angel investors, and more recently, crowdfunding. The rude news is that, just like getting a loan, you have to have your corn flakes together to score this kind of funding. The bad news is the investor capital process is very complex, and almost always takes longer. And as you have and will continue to learn, there’s more to acquiring investor capital than writing a business plan.

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Searching for investor capital? Don’t make these mistakes – Part I

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This is the first article in a two-part series on how to maximize your chances of success when approaching an investor for your business.
One of the modern marketplace myths mouthed by talking heads and politicians is that small businesses don’t have enough access to capital. You could write a book about what these people don’t know about small business.

It’s true that capitalizing a startup isn’t easy. Here’s some non-breaking news: funding a startup is supposed to be hard. But if you have a viable business model, a performance track record, can justify future performance, and are creditworthy, capital sources will come and play in your backyard. But remember the Marketplace Golden Rule: “He (or she) who has the gold, makes the rules.”

Before we go further, let’s identify the four primary sources of small business capital:

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What your bankability says about your business’s sustainability

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Not that long ago, there was a lot of noise and some clarity about the concept of crowdfunding, which is using technology to aggregate the funds of donors/lenders/investors for a specific recipient/business.

During that period, I tried to be part of the clarity by writing several articles about the three different kinds of crowdfunding, which are: contribution fundraising, business lending and investment acquisition. Today I want to revisit the lending model, with some new information.

Crowdfunding lending is like the traditional kind in that a request for funds comes with the promise of repayment with interest over a specific term. Proceeds for a bank loan comes from depositors; with crowdfunding, the cash comes from investors. But unlike the bank loan, crowdfunding lending is conducted almost exclusively online. Individuals use crowdfunding loans, but our focus here is for business borrowing.

It’s important to report that the term crowdfunding is now more widely referred to as FinTech, because the interface process, from borrower introduction and debt service, to return of capital for investors is conducted on a digital platform. At the heart of the purpose of this article is that regardless of the funding source – crowdfunding or traditional – interest and terms on small business loans are always higher and tighter than for any other business sector. Almost by definition, a small business loan is a high-risk decision, for two primary reasons:

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