0 (2s):
Who's ready to rock today, Fire Nation? JLD here and welcome to Entrepreneurs on Fire brought to you by the HubSpot Podcast Network. With great shows like Marketing Made Simple. Today we'll be breaking down, starting, maintaining, and growing your business. To drop these value bombs, I have brought Xan Myburgh into EOFire Studios. Xan is a serial entrepreneur coming from a family of entrepreneurs. He successfully launched Cash Flow Capital in South Africa before launching backed business funding in Austin, Texas in 2018. And Fire Nation will be talking about building a sustainable business, how to take on debt the right way, investing in yourself for growth, funding, and so much more.

0 (43s):
And a big thank you for sponsoring. Today's episode goes to Xan and our sponsors, Marketing Made Simple hosted by Dr. JJ Peterson is brought to you by the HubSpot Podcast Network. The audio destination for business professionals Marketing Made Simple brings you practical tips to make your marketing work. In a recent episode, Amy Porterfield shared her five email Marketing Secrets for Long-Term Business Growth. Listen to Marketing Made Simple wherever you get your podcasts. The best podcast listening and discovery app in the world is here and is called Podopolo. Visit Podopolo.com. Download the app, mention John Lee Dumas, my Podopolo username when you sign up for a free account, and start listening now. That's P O D O P O L O.com. Xan say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with.

1 (1m 37s):
What's up? Fire Nation? Thank you so much for the opportunity. So I think most people believe that starting a business requires a novel or unique idea on a, on a product or a service. And I believe that fundamentally untrue, I think you need, you need a product or that's good enough. You need to be able to solve a problem that, that the current solution for might not be hundred percent ideal, but a successful business is about execution.

1 (2m 17s):
It's about delivering that product. And yeah, that's, that's what we fundamentally believe in in in all the businesses we've, we've sort of built and even the businesses that, that we, that we back, that we fund. We wanna see, we wanna see operational infrastructure, we wanna see execution. So it's not about the idea, not about the the new thing. Well,

0 (2m 44s):
Fire Nation, today we're talking about starting, maintaining and growing your business. And I really wanna focus on this because I know a lot of us that are listening to this right now and are in the game of entrepreneurship. This is one of the things that we, we really want to get our finger on the pulse with. So let's talk about building a sustainable business. What is your recommendation for our listeners right now who are looking to do just that?

1 (3m 11s):
That's a great question. There's no solver bullet, right, or or secret formula that that's the answer to each and every business. It, it is subjective, but I can say from, from having been fortunate enough in our business to, to have to have underwritten hundreds of thousands of businesses, not only here in the US but in, in South Africa, in our previous business. There are a few things that, that entrepreneurs need to focus on. And I think one of those, those things is, is profitability is, you know, your monetization model.

1 (3m 51s):
Like how do you become profitable as quickly as possible? And I think there's been an emphasis, you know, in the US especially in in, if you tend towards Silicon Valley on, you know, funding rounds and growth at all costs and buying revenue, and that's, that's gonna limit your options. You know, if you have, if you have a profitable business, you don't necessarily need our capital. The only reason you would need our capital is to really grow and really scale. And that's, that's what we sort of look for, you know, in in underwriting our, our potential clients is, is we look for, we look for companies that, that are looking to grow, not companies that are looking to survive.

1 (4m 39s):
And, and I generic answer sort of, sort of give some guidance, but that's, that for me I think is, is an important mind shift to have is, is to build a profitable business as quickly as possible. Obviously you can't be profitable from day one. I mean that's impossible, but you need at least a roadmap and it needs to be a focus.

0 (5m 2s):
Now you did mention this word during that answer, which is debt and debt can just be a scary word for a lot of different reasons, but it can be a powerful word and a powerful action when used correctly. Is there a strategy for when to take on debt?

1 (5m 20s):
Every business irrespective of size, apple Corporation has debt. I think it's, it's about the decision on, on when to take on debt and it and needs to be, it needs to be very well, well thought out. And, and what I, what I typically see is you see two scenarios. You see someone that's, that's looking for debt because they need life support. You know, they need to make payroll, they need to survive at any cost. And, and then in that scenario, I would, I would be very hesitant because you're really kicking the can down the road, but a scenario where you can do a net present value calculation and you can assess the cost of the opportunity versus the the value add to your business or the the profit that the opportunity will generate.

1 (6m 19s):
And if, and if it is the case that, that that opportunity will generate, you know, an amount in excess of the, of the cost, then I would highly recommend growing your business and, and using debt to do so. I mean, we've seen that, you know, our clients managed to grow their businesses tenfold over the period of a few years with, with utilizing our, you know, our short term capital solution. And, and this is, is something that, that we feel, you know, we're enabling the entrepreneurs to do where the alternative would've been, you know, family and friends money or having to sell a piece of their business, which is also a difficult decision to, to make.

0 (7m 10s):
Now Fire Nation has definitely heard from time to time that investing in themselves is the best investment they can make. How do we know when the right time to invest in our own personal business growth is upon us? How do we know that hey, now is the right time to take money or to take profits or to take on debts to actually reinvest in our own personal business growth?

1 (7m 36s):
I would say that there are a few key principles that one must take into account, right? So your retained earnings, your, your profit that balls up in your business is going to be your cheapest form of capital, right? And then from there you'll go to, you know, you, you might be fortunate enough to get a, you know, a bank line from a bank and then, you know, you have alternative lenders like ourselves that can, that can assist in growing a business. And then obviously the most expensive form of capital is, is selling a part of your business? Is, is, is equity and you know, be careful to take your retained earnings and, and pay that out in distributions.

1 (8m 20s):
Cause you might be in a situation down the road where, where you would need that capital for specific projects to grow. If you're in a situation where you have, where you have opportunities to grow, I would say take it at, at almost any cost where, where you feel like it's gonna be a value add to your business and it's gonna grow your business. Assess those opportunities and assess your, you have, and I mean any entrepreneur knows like if your business isn't growing, it's dying. So, so I, I mean I've very few entrepreneurs that, that do not wanna grow their businesses.

1 (9m 9s):
I think the decision is how do you go about that? You know, don't on too much debt, be very wary of selling equity in your business. And also if you have a, or if you're sitting on a pile of cash, be hesitant to increase your lifestyle cause you might need that going forward.

0 (9m 30s):
Starting maintaining, growing your business. These are all challenging things, Fire Nation. And you know really how Xan ended that about being careful with the pile of cash that you have with the money you have in reserves. Cuz so often people fail because they run out of runway, they run out of revenues, they run out of money to sustain the business where they could have just gone over that little hump or in the case that we're looking at right now, they can get over the little recession that we're going through. That could be big, small, huge, who knows, competitors kind of waft away a little bit. They fail and then those ones that can emerge because they had the capital to do so and they had the business model to do so now they look around, they're like, wow, like the competitive environment is a lot different and now it's much more beneficial to those people who survived the tough times and came out fairly unscathed.

0 (10m 23s):
And we have a lot to talk about when it comes to funding and so much more when we get back from thanking our sponsors. Ready to dish your subpar podcast? Listening app and download an interactive app that has every feature you want and need with more great features being added all the time. The app is Podopolo and you can download it free and start listening right now at Podopolo.com. Podopolo gives you access to every podcast at your fingertips with easy, discoverability, audio and video, podcast and every genre and language and instant recommendations. So the perfect podcast and live streams find you without you having to lift a finger. My favorite feature Podopolo was interactive.

0 (11m 4s):
So you can create and share short snippets and discuss episodes with friends and your favorite hosts. Join me on Podopolo where you can interact with me, connect with others, ask questions, and share your thoughts on your favorite podcasts. Visit Podopolo.com, download the app for free from either app store. Mention John Lee Dumas, my Podopolo username when you sign up for an account and start listening now. That's P O D O P O L O.com.

2 (11m 31s):
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0 (12m 1s):
Xan, we're back. And as I mentioned before the break, I wanna talk about funding. Let's get specific here. Where can we secure funding if we're looking to both start and scale our business?

1 (12m 13s):
I would start by going to our website backd.com. And I think, you know, it depends on, depends on your business, it depends on time in business, it depends on your experience as an entrepreneur. It also depends on your personal resources. And I think the, the first, obviously the first few months of starting a business, you are, you are sort of bootstrapping. And then as you, as you grow and as the opportunity increases for you to grow your business, procure clients and you taste and iterate, there are a lot of alternative lenders and you know, capital providers that, that can assist you and, and we specialize in in doing that.

1 (13m 8s):
I think what's happened in the US over the last call it 10 years with increase in regulation, decrease in your amount of community banks, alternative lenders like ourselves have sort of up to be able to solve that problem for. So I would, we can, we can, with business advances lines of credit, we have partners that can provides loans, asset finance, longer term facilities, whatever entrepreneur market or, or their specific business opportunity

0 (13m 48s):
Fire Nation, that is backd.com. B a c k d.com, backd.com without the E, B A C K d.com. Now let's talk about increasing our chances of being approved for business funding, for going after it. Like of course you deal with a lot of clients in your business that you know are applying and some get accepted, some get denied. There's a lot of ways that we as entrepreneurs, as business owners can make ourselves more appealing and, and h and raise our chances of being approved for real business funding. What are some things you recommend our listeners do maybe before they actually even go forward just to make sure that they're presenting the best opportunity possible.

1 (14m 34s):
We need our clients to have at least one year's worth of operations or the business needs to be in existence for at least a year. And that being said, there are exceptions. You know, if you have an entrepreneur that's had 10 years’ experience in a specific industry and he started his own business in that industry and he is only been operating for six months, we're happy to look at a, at an exception like that, you obviously need a business banking account. And for us specifically, I would say minimum of about 200, $300,000 worth of yearly, yearly revenue. That's, that's sort of what we're, we're looking for.

1 (15m 14s):
But there are, there are other companies in our space where it might be a little bit smaller than that.

0 (15m 21s):
So what are some really good tactics and strategies? And let's get specific heres on like, let's give some real strategies, some real tactics that entrepreneurs can do to make themselves more appealing to get funding. Like let's really walk people through what a process could look like.

1 (15m 38s):
We assess your bank statement, so we look at your client base, do you have one client or do you have a hundred clients? So we look at the concentration risk for your business. If you have one client that's negative, if you have a hundred clients, one of those clients go away, you're still going, you're still gonna generate revenue. We look at the volatility of your revenue. So let's say for example, one month, you $10,000 the next month, hundred thousand, that's a negative. We're looking for a business that's consistently generating generating revenue. Any, any funder, any lender is making a bet on assessing your historic performance and whether or not that performance is gonna repeat itself.

1 (16m 30s):
So the, the more beneficial or credit with your historical performances, the, the lower risk or perceived risk exists in your business. So from a, from a lender's perspective, we wanna see profitability or at least a roadmap to profitability. We wanna see low volatility, low concentration risk, we wanna see, you know, a decent balance sheet. We wanna see a sustainable business. So if there's one employee and you knows hit the business doesn't exist anymore.

1 (17m 11s):
So we're looking for of a employee base, some sort of a physical presence, you know, maybe a small office or at least a, if it's a manufacturing business or distribution business. So we look for, we look for data points that can justify an investments in the data of business. It's a subjective thing and I flexible and we're, we're more focused on the story than, you know, traditional lender, like a bank that would just go well.

1 (17m 58s):
So we're, but I would fundamental infrastructure or you know, revenue generating

0 (18m 14s):
Fire Nation, what type of recurring revenue can you point to revenue that's coming in month after month that can be proven. What does your historical performance look like and how can you improve that going forward? Xan we've talked about a lot of stuff today. We talked about debt, we've talked about sustainable business, about getting funding. What is the one key takeaway that you really wanna make sure a Fire Nation gets from our entire conversation today?

1 (18m 44s):
Having started a few businesses myself, I understand that's a lot of anxiety. There's a lot of stress, there's a lot of pressure when your business moves from uncertainty to certainty. So when you're unsure of whether you are gonna, you know, close the next deal, whether you're gonna make payroll, whether you are, you're gonna, you know, generate revenue next month to, okay, now I am generating revenue, I have a real business now I'm trying to grow. And I think that process cause of the stress and anxiety and the, you know, the fresher associated is sometimes where entrepreneurs are so focused that they don't it.

1 (19m 28s):
And my recommendation would be to try to have fun, try to enjoy that process because it really is, it really is one of the, it's gonna be the most fun you're ever gonna have in your life building a business. And I don't, I don't want people to discount that cause of the pressure. So that be my, and if you enjoy it, you're also gonna, you're also gonna be more successful. I've seen that, I've seen entrepreneurs that love their business, that love what they're doing and they, they're just more successful cause

0 (20m 2s):
Of it. Xan backd.com is where Fire Nation go to find more. That's B A C K d.com. What other places do you want Fire Nation to go to connect with you to understand more about your brand? What is your call to action for Fire Nation?

1 (20m 19s):
Yeah, I mean, I think it's a first step. Go to our website. We're a very sort of user-friendly product and business is, is a number you guys can call to reach out every single business we fund, there's a merchant interview or at least a, a discussion with the entrepreneur to understand their business. That's the advice

0 (20m 41s):
I would Fire Nation. You're the average of the five people you spend the most time with and you've been hanging out with Xan and JLD today. So keep up that heat and head over to EOFire.com type Xan, that's X A N in the search bar, the show notes page will pop up with everything we've talked about. And of course, backd.com is there direct URL for their website. Xan, thank you for sharing your truth, your knowledge, your value with Fire Nation today. For that we salute you, brother and we'll catch you on the flip side. Thank you guys. Hey Fire Nation, a huge thank you to our sponsors and Xan for sponsoring today's episode and Fire Nation. Are you ready to rock your very own podcast?

0 (21m 23s):
Check out our free podcasting course where I will teach you how to create and launch your podcast for free free podcast course.com and I'll catch you there. Or on the flip side, Marketing Made Simple hosted by Dr. JJ Peterson is brought to you by the HubSpot Podcast Network. The audio destination for business professionals Marketing Made Simple brings you practical tips to make your marketing work. In a recent episode, Amy Porterfield shared her five email marketing Secrets for long-term business growth. Listen to Marketing Made Simple wherever you get your podcasts. The best podcast listening and discovery app in the world is here and it's called Podopolo. Visit Podopolo.com download the app, mention John Lee Dumas, my Podopolo username when you sign up for a free account and start listening now.

0 (22m 8s):
That's P O D O P O L O.com.