Latest / The Start, Scale & Succeed Podcast / Grow Your Business Without Personal Guarantees with Sue Schuster (stage 3) - Ep. 443

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Grow Your Business Without Personal Guarantees with Sue Schuster (stage 3) - Ep. 443 · The Start, Scale & Succeed Podcast

• 0:00
  Scott Ritzheimer: Hello, hello, and welcome, welcome once again
• 0:04
  to the Start, Scale, and Succeed podcast, the only podcast that
• 0:06
  grows with you through all seven levels of your journey as a
• 0:10
  founder. I'm your host Scott Ritzheimer, and today we're
• 0:13
  going to talk about founders who they need capital to grow, but
• 0:19
  you just can't be the one personally guaranteeing
• 0:22
  everything because you and I know that being a founder is a
• 0:25
  personal enough journey. We don't need to make it more
• 0:28
  personal than it already is. But it seems like everywhere you go,
• 0:32
  that's exactly what everybody wants to do before they'll give
• 0:35
  you a dime. And so when you're sitting there and you want to
• 0:39
  grow and you know that next hire, either you know, to get
• 0:42
  the hire, to get the equipment that they need, or to get the
• 0:44
  opportunity, is going to require credit, capital, something from
• 0:49
  outside the business to give you that kickstart that you need. My
• 0:52
  guest today is going to be a real help because she helps
• 0:55
  founders to find the capital they need without blindly
• 0:57
  betting everything they own. With us today is Sue Schuster.
• 1:02
  She's the COO, I'm sorry, of Bizfi.io, and a business funding
• 1:07
  strategist who helps entrepreneurs access the capital
• 1:09
  they need to grow, sometimes without putting their personal
• 1:13
  credit at risk. With more than 20 years of experience as a
• 1:16
  business owner, she understands how cash flow, how funding and
• 1:22
  how financial clarity make or break a company's ability to
• 1:25
  scale. A former competitive athlete and coach, she brings
• 1:29
  discipline and resilience and strategic mindset to the
• 1:31
  business owners that she advises and supports. Sue specializes in
• 1:35
  working with consultants, coaches, fractional CFOs,
• 1:38
  equipment sellers, and small business service providers to
• 1:41
  help their clients secure working capital, equipment
• 1:44
  financing, growth terms, and SBA funding. Sue, welcome to the
• 1:49
  show. Glad to have you here. I got really excited when I was
• 1:53
  doing research for this because of just how how practical you
• 1:57
  make it. And and so one of the the challenges, and kind of
• 2:00
  mentioned this as we opened up, but one of the challenges that
• 2:03
  every founder faces is this journey is so hard and so deeply
• 2:08
  personally challenging that when you go to get the help that you
• 2:13
  need, at least that's what it feels like, and everyone turns
• 2:16
  around says, "Hey, you know, put your house up for it, or put
• 2:18
  your retirement up for it, or or you put your name on this line.
• 2:22
  It just it feels so. It feels like we're trapped. How do you
• 2:26
  help founders that that feel stuck in this place in between?
• 2:30
  And and how how can they think differently about financing as a
• 2:34
  whole?
• 2:35
  Sue Schuster: Well, Scott, that was a lot to begin with, and
• 2:38
  thank you. But I just like today, got off a call with a
• 2:42
  founder, and she just started her business and everything
• 2:45
  else. And they're already like, even their business has only
• 2:49
  been in business for three months, and they're already
• 2:52
  getting inundated by the people who want to give them money via
• 2:55
  merchant cash advance because that's the easiest. So often you
• 3:01
  are signing your life away. The SBA requires it, depending on
• 3:04
  the state you're in. It might your house might be the
• 3:07
  collateral. It might not be. The easiest funding to get without a
• 3:12
  personal guarantee would be equipment financing. Any of the
• 3:15
  working capital, any of the capital here's money, use it
• 3:17
  wisely type loans are going to come with that personal
• 3:20
  guarantee, and we know that this is like your third, fourth, or
• 3:24
  first child in in your business. And I was a business owner
• 3:28
  myself, and you know when you sell your business, it's like
• 3:31
  giving away your child. It's worse than them going off to
• 3:33
  college. I've been through both, so it is deeply personal. But
• 3:40
  the fact of the matter is that you have to bet on yourself.
• 3:43
  This business is yours, and it is a reflection of you. And
• 3:47
  that's also what I teach definitely female entrepreneurs:
• 3:50
  is that even if the salon down the street is doing the same
• 3:53
  thing that you are, it's never your business because you are
• 3:57
  your business. So everything is deeply personal, and if you want
• 4:01
  working capital or just capital, it's probably going to be
• 4:05
  personally guaranteed because these lenders want to lend you
• 4:09
  the money, but more than that, they want to get the money. They
• 4:12
  want to back. They want to make money on their money. What's my
• 4:15
  return on investment? That's what everybody's asking.
• 4:19
  Equipment financing is slightly different because the equipment
• 4:22
  itself is the is a collateral, so you can get away with more
• 4:27
  just working on your business corporate credit, growing that,
• 4:32
  which takes time too. It's not a quick fix, but equipment
• 4:37
  financing is a whole lot easier. Can fit in the box of I don't
• 4:40
  need to personally guarantee this a whole lot faster than a
• 4:44
  capital loan.
• 4:46
  Scott Ritzheimer: Yeah, and one of the ways I would imagine that
• 4:48
  this can be used if you if you have some capital available and
• 4:51
  you need equipment and you need to make other purchases, I'm I'm
• 4:54
  imagining that you could pursue the equipment capital line for
• 4:58
  the equipment capital. Which would then free up the other
• 5:01
  resources that you have for other expenditures. That is that
• 5:04
  accurate?
• 5:05
  Sue Schuster: That's a strategy that we were just talking about.
• 5:07
  I don't know two hours ago, because she wanted money for
• 5:11
  equipment for what they're doing, but then she also wanted
• 5:13
  to hire somebody, and of course you don't have the money to hire
• 5:16
  somebody until you make the money with that money, with that
• 5:19
  person, and then she wanted money for marketing. I said,
• 5:21
  "All right, well, you've only been in business for this long.
• 5:25
  It hasn't been long enough. You're not making the revenue.
• 5:27
  Any money we're going to get you is the expensive money. I can
• 5:30
  get you expensive money, but I don't want to get you expensive
• 5:33
  money. Let's go after this equipment so that you can make a
• 5:38
  little bit more money faster and start checking off these boxes
• 5:41
  of time and business and revenue, so that we can get
• 5:45
  better funding later.
• 5:49
  Scott Ritzheimer: Switching gears just just slightly, one of
• 5:52
  the things that I've bumped into, and this seems to be a
• 5:55
  little bit newer, maybe last 5, 10 years, but there's almost
• 6:00
  this kind of subculture in in some areas that debt is failure.
• 6:06
  That it's some kind of like there's a there's some type of
• 6:08
  morality attached to it. Is how do you how do you reconcile
• 6:14
  where do you stand on that? How what's a healthy way of viewing
• 6:17
  debt in a business context?
• 6:19
  Sue Schuster: Well, there's even some religions that won't allow
• 6:22
  you to go into debt. Just FYI, yes, I find the debt averse.
• 6:27
  They don't want. They want to bootstrap everything. And the
• 6:31
  questions that I start asking, like this individual, I'm like,
• 6:33
  "What do you need the money for?" Well, I need it for this,
• 6:35
  that, and the other thing. But if I can bootstrap things, I
• 6:39
  rather do that than get into debt. But if I bootstrap things
• 6:43
  and it's going to take me a year, two years, three years to
• 6:47
  get to some place I can get a whole lot faster, it can really
• 6:51
  jumpstart the process. Now I don't want to get people in debt
• 6:54
  just to get in debt. That's not what are we using the money for?
• 6:58
  Do you have a CFO that can help you use it. Are you utilizing a
• 7:02
  coach? I mean, where is the? Are you just using chat? I don't
• 7:06
  know. It can work, but who's making you responsible and
• 7:11
  accountable for this to make the money grow? If you're not ready
• 7:15
  to, if I gave you 10,000 or $100,000, boom! Here's $100,000.
• 7:19
  Do you already have a plan in place to make more money with
• 7:22
  this money. If the answer is no, then that's not a good time to
• 7:26
  go into debt. If the answer is, oh my goodness, I know exactly
• 7:29
  what to do with that. We make double, triple that in this much
• 7:33
  time. That's a perfect time to get funding.
• 7:36
  Scott Ritzheimer: Yeah. So you started to list off a couple of
• 7:43
  things embedded in a story, and I actually want to pull these
• 7:46
  out a little bit clearer. So one of the things you were talking
• 7:48
  about with your earlier today was getting ready to be
• 7:52
  creditworthy, and and and as far as I understand, and I'm a
• 7:55
  novice at all of this, but business credit and personal
• 7:58
  credit are are two different animals. How do you get your
• 8:01
  business ready, and and how do you get your personal credit
• 8:05
  ready to give yourself the best shot when you do want outside
• 8:09
  capital?
• 8:10
  Sue Schuster: Well, one thing that us founders love to do is
• 8:13
  to utilize our own personal credit, especially those
• 8:16
  tradesmen or people who just getting into business and
• 8:18
  they're like, "Well, I don't have the revenue. I need to pay
• 8:20
  this bill. I'll just pay it and use my credit cards. And now
• 8:23
  your utilization personally goes up really high. I can't tell you
• 8:27
  the amount of people that I end up actually putting in debt
• 8:30
  repair because they're now they were 750 and now they're 650 or
• 8:36
  620 or barely 600. And now the financing is really really hard
• 8:41
  to qualify. People won't look at them because now you've utilized
• 8:44
  their personal. So personal would be your TransUnion,
• 8:50
  Experian, Equifax. Business completely separate. It is Dun
• 8:57
  and Bradstreet, and everybody can get their free Dun and
• 8:59
  Bradstreet score. Experian business and Equifax business.
• 9:03
  So those three, there are different cards that go and
• 9:07
  start reporting. Often things don't report at all. Give you
• 9:11
  some kind of businesses that report. Quill reports. Uline
• 9:17
  reports. So if you start like Net 30 or whatever, then you can
• 9:21
  start building your corporate credit. Some the Spark card
• 9:25
  reports to all three. A lot of your gas cards, those report.
• 9:30
  Who's not reporting? A lot of people. Your bank is probably
• 9:33
  not reporting at all. American Express, American Express,
• 9:38
  except for the top card, doesn't report. Low. and Home Depot
• 9:44
  reports when you're tier two. So there's all kinds of ways to
• 9:49
  build corporate credit, but it's really hidden and really hard to
• 9:53
  do. There's many many companies out there that have been in
• 9:56
  business for years and years and years, and they make millions of
• 9:58
  dollars, and they still aren't. Reporting and or very little is
• 10:02
  reporting. So the corporate credit is kind of I don't enigma
• 10:06
  to many many businesses, and it's also changing a little bit
• 10:10
  to the SBSS score, which unfortunately does incorporate
• 10:14
  the business owner's personal. So the business score is
• 10:19
  actually leaning more towards being part of the personal. It
• 10:22
  is less and less completely separate.
• 10:27
  Scott Ritzheimer: So working through this, so we've got kind
• 10:30
  of a clear-eyed understanding of of you know what role debt can
• 10:34
  play in the relationship. We've we're getting away from personal
• 10:37
  credit. We're starting to build professional credit, and we've
• 10:39
  got a plan for how to use this money, and maybe even looking at
• 10:42
  the different types of of capital that are available. You
• 10:46
  again kind of just barely touched on. I want to come back
• 10:50
  to it, but what's a good plan for your money, and what's just
• 10:53
  a plan that sounds good for your money? Because even you
• 10:56
  mentioned using Chat GPT, it's easy to make really wonderful
• 11:00
  looking plans now. It's easier than ever. What's the difference
• 11:04
  between a wonderful looking plan and a sound plan before you take
• 11:09
  out debt?
• 11:10
  Sue Schuster: How actionable and how ready you are for it.
• 11:13
  Because you can. Whenever somebody says, "I need a million
• 11:16
  dollars," well, why don't you need $954,000? Why is it? Why
• 11:22
  it's just a round number? It looks pretty. Why do you need
• 11:25
  the money you're asking for? I mean, have you really looked
• 11:28
  into it? Do you have your business plan? All all these
• 11:31
  things are are necessary. You shouldn't just get the funds. A
• 11:36
  lot of what I do is actually restructure debt, so people have
• 11:40
  gotten taken advantage of. I'm going to say taken advantage of
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  with the merchant cash advance. People call them if somebody's
• 11:46
  calling you up says I have money for you. It's easy. Just fill
• 11:49
  this out. That's probably not great money to get because the
• 11:54
  SBA people are not doing that. The growth, the term loan people
• 11:58
  are not doing. The HELOC people are not doing that. They might
• 12:00
  put some ads places, but they're not calling you. The merchant
• 12:03
  cash advance people are doing that. So if they have gotten
• 12:06
  into that space and they're like, "Oh, I could really use 50
• 12:09
  grand for my business," and now they're looking at 30, 40, 50.
• 12:13
  I've seen 60% interest rate. I know. Talk to people who are
• 12:18
  like, "That's the mafia." I'm like, "Well, maybe." We do go
• 12:23
  refinancing those. So in that situation, you don't need to
• 12:26
  really know your number. But if you're looking to start really
• 12:31
  growing the business, you need to know kind of what you think
• 12:34
  your return on investment is. When do you need the money? If
• 12:38
  you need quick money, that's usually bad money. If you have
• 12:40
  time to put in all your documentation, which would be
• 12:43
  your tax returns, your business, maybe personal and business,
• 12:48
  your business accounts, see where those numbers are, your
• 12:52
  debt schedule. I mean, these are all things loan officers and
• 12:57
  underwriters are going to look for. Did I answer the question?
• 13:02
  Scott Ritzheimer: Yes, yes, yeah, and I think focusing in on
• 13:05
  on actionable insight because again, it's it's easier than
• 13:08
  ever to come up with things that look really good, but how much
• 13:11
  history do you actually have putting it into action? I think
• 13:13
  is a great a great litmus test. I have this question. I want to
• 13:19
  make time for it because it's a question that ask all my guests,
• 13:21
  but the question is this: What is the biggest secret that you
• 13:24
  wish wasn't a secret at all? What's that one thing you wish
• 13:27
  every founder watching or listening today knew?
• 13:30
  Sue Schuster: I guess it would be about corporate credit,
• 13:32
  because nobody knows about that. Everybody's like, "Oh yeah, I
• 13:35
  have this credit card. I'm sure it's reporting to the agencies."
• 13:39
  And no, it's not. I would check your Dun and Bradstreet score. I
• 13:43
  would make sure that they know you exist. You can tell Equifax
• 13:47
  and business and Experian business that you are a
• 13:50
  business. And hey, start tracking because I'm doing great
• 13:54
  things over here. I use my credit and I pay it off. It's
• 13:56
  not how much money you make; it's how much you use and pay
• 14:00
  off throughout the the course of your business, so that's what I
• 14:04
  would want everybody to know. Don't figure out what the heck
• 14:07
  corporate credit actually is, so that they can start utilizing
• 14:10
  it. And the lenders know what it is, so we as business owners
• 14:13
  should know too.
• 14:15
  Scott Ritzheimer: Brilliant, brilliant. If somebody wants to
• 14:18
  know how to do that, or even more importantly, how to
• 14:20
  actually build it once they have the number, and they they love
• 14:23
  to reach out to you, find more out about that, or or the
• 14:25
  financing options that you offer. Where can folks connect
• 14:28
  with you? Where can they find out more?
• 14:30
  Sue Schuster: LinkedIn's a great place, which would be Sue
• 14:33
  Schuster, or my email, which is Sue at b i z hyphen f i dot i o.
• 14:42
  Scott Ritzheimer: Fantastic, fantastic! We'll get those both
• 14:44
  in the show notes for y'all. You don't have to go looking for
• 14:46
  either one of them. Sue, thank you so much for being on today.
• 14:50
  Learned a ton. Really appreciate your time being here with us.
• 14:53
  And for those of you watching and listening, you know your
• 14:55
  time and attention mean the world to us as well. I hope you
• 14:58
  got as much out of this conversation. As I know I did,
• 15:01
  and I cannot wait to see you next time. Take care. Hey
• 15:08
  everyone, Scott Ritzheimer here. Thank you so much for listening
• 15:11
  to the Start, Scale, and Succeed podcast. I hope this episode
• 15:14
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• 15:18
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• 15:22
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• 15:25
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• 15:30
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• 15:36
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• 15:40
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• 15:43
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• 15:47
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• 15:51
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• 15:54
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