Mastering Finance

Keith Kohler is a businessman who’s worked with and impacted hundreds of companies with financing and financing education. He’s the Founder of The K2 Group LLC, a finance consultancy. Over the past few years, Keith has originated and closed over $100 million in financing, with a particular focus on the natural products and food and beverage industries.  He supports founders in multiple other areas via several other roles, including as a mentor of the Nutrition Capital Network, as a Year 5 Mastermind Advisor for Babson College’s Women’s Innovating Now Growth Lab, and as a Wharton Venture Lab Expert in Residence and Mentor. In a nutshell, Keith is a FINANCE GURU!

Financing Evolution 

Keith notes that businesses had to raise capital in-house or speak to banks to gain financial support in the past. However, with so many options available now, it is just awesome to see the changes fintechs have brought to business financing. The business financing space is now a competitive one, which gives businesses more options to secure financial backing.

Fintech

In Keith's perspective, fintech provides diverse financial solutions outside the scope of traditional banks. Although they typically offer higher rates on financial aid, they make up for this shortcoming with a speed of execution and ease of transaction. They are always online and not bound by the geographical constraint of traditional banks.

According to him, longevity and profitability are major determinants of companies suited to fintech solutions, i.e., young businesses are well-fitted for fintech solutions. Fintech solution also benefit companies that desire to turn around their finances but not as a matter of urgency.

Business Financing

Several factors are considered to determine the best financial option for businesses, such as projections based on their financial history, current financial situation, and future predictions. The best financing options can then be resolved through the analysis of these parameters and projections.

How Business Financing Works

On how business-financing works, Keith noted that after the initial assessment and determination of suitable financing options, the next item is to determine documents - both financial and legal - needed to access the financial aids. After collating these documents, the next step is reaching out to various lenders. A robust lending network is essential to achieve the company’s financing goals.

According to Keith, business owners must be exposed to various requirements of underwriters and credit analysts. They should also develop a deep understanding of their needs and disposition to distinguish between a good and bad business financing deal. This knowledge will ultimately help bring success in negotiations and exploring alternative routes.

Financial Mistakes

In discussing financial mistakes businesses make, Keith believes that business owners have many options, especially on their choice of accounting tools. However, one of the first financial mistakes business owners make is declaring losses in the financial statements to avoid paying taxes. This practice makes them ineligible for many financing options.

Another financial mistake businesses often make is not paying attention to their credit score. This usually has adverse effects on financing options for business owners. Correcting credit scores takes time; therefore, attention must be paid to maintaining a healthy and robust credit score in the first place.

Another mistake is not keeping up with the historical cost of the business. Business owners must set a trajectory for the long term to be able to prove to financiers that their business is worth a long-term punt. Business owners must be conversant and updated with their finances to hold conversations with credit analysts. They must be able to prove through adequate knowledge and analysis that their business will maintain long-term profitability.

 Listen to the full episode with Keith here.

Corey Kupfer is an expert strategist, negotiator and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author and professional speaker. He is deeply passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

If you want to find out how deal-ready you are, take the Deal- Ready Assessment today!