 Hey, guys, welcome back to the podcast and welcome to another episode with my friend Andrew Kosal from Valor Accounting Services. How are you, Andrew, today? I'm very well, Leo. How are you doing? Very well. I'm always looking forward to our little chats and catching up. Yeah, same here. Fantastic. Right, so today is a really interesting topic. It's where we're going to be talking about business funding, right? That's something that a lot of coaches that I speak to ask me about, but there's also a lot of coaches that don't actually know what business funding is. So as we discussed, I feel this is something that's going to be of value to a lot of coaches and what best person then yourself, Andrew, to talk to our audience about business funding. Ah, that's a nice word there, Leo. Awesome. Over to you. Brilliant, brilliant. Yeah, thanks for that, Leo. So yeah, I think business funding is a very important topic for the business owners and sports coaches where they're looking to improve their business in some sort of way. So we're going to first look in terms of the reasons for funding and the different types of funding that a sports coach may be looking for at any stage of their business. So the first one is, okay, what are the reasons for looking? Why would a sports coach look to help fund their business? A few here just a touch on expansion growth. That's probably one of the most obvious ones. Common ones is they're looking to expand their business. They may want to rent larger premises, they may want to hire additional coaches, and they may not have enough funding currently to make that happen. They might want to get new equipment, brand new equipment, which will hopefully, down the line, bring more business into the company, and they may want to grow quicker. They may want to just have that funding to allow them to grow quicker, and they may want to sell the business in the future and then do something else after. So there's also that as well. And other things as well is marketing campaigns. They may want to look for funding to allow them to do a one-off marketing campaign maybe once in a year, and it may take a bit of an investment to do that. So yeah, and there's other reasons, for example, just to finance some of their expenditure, maybe they want to replace equipment, maybe some day-to-day things. They may be in debt for some sort of reason. They might want to look into recover from external factors, and it could be depending on the economic climate. For example, the pandemic, which is a really good example, where it's just something outside of their control. And luckily, the government were able to assist during that time with the things like bounce back to London, things like that. And maybe things like seasonality. I know we've spoken about this in the previous podcast, and it just keeps coming up again and again. And when we talk about seasonality, it's about certain times during the year where a sports coach may be particularly quiet, not much business going in, and it really depends on the type of sports coaching business they have, what type of sports it is. And another reason could just be poor financial management. Maybe they've been trading for a number of months or a number of years, and they've not been very careful with seeing where the numbers are going. Maybe there's been increases in certain expenditure. Maybe they've not increased their prices, and then all of a sudden, they're not being able to pay for operational expenditure and things like that. So that might be another reason as well. And another one could be just being prepared. There's nothing wrong with seeking funding just for a rainy day. Especially when, for example, if you want to open up a line of credit and interest rates are good, or there's an opportunity where you can get a business loan or open up a credit card and have it there, you don't have to use it. You can have it there because maybe during the times where something hits the fan, so to speak, then you've got it ready. You don't have to apply for it. You don't have to wait for it. So being prepared is something that can be quite good. Yeah, no, great start. And also for those coaches watching, this is something we're going to talk about, but there's obviously different types of funding that you can get. If you're a private limited company, then you can apply for a certain amount of funding. If you're a non-profit, there will be some support as well. So yeah, this is something we're going to touch on later, aren't we? Yeah, definitely. So yeah, and I think we'll start with the basic one is self-funding, which is called bootstrapping. I guess really there's two common scenarios that we come across. And also you've come across this as well, Leo, working with sports coaches, is that you get a lot of business owners that are looking to start their sports culture business and they maybe got a full-time job, right? And it may be in sports, maybe in other areas, and they want to kind of taper off that. So when they start earning money from their side business, they want to then grow that, still having the full-time employment, then maybe switch to part-time until that business grows. Or there's another scenario where that sports coach just quits their job, they have savings, they've got a decent business plan, and they're just saying to themselves, you know what, I'm just going to go into this. And whatever income I earn from my sports coaching business, I'm just going to reinvest it back into the business. Got some savings to help me for a certain period of time. And that's very common as well. And bootstrapping, that could also mean if that works out, or there's another way that you're running your own business, there are obviously pros and cons to this, right? Obviously, the pros is you get full control. It's your business, you can do what you want with it. You've got no debt, for example, because you're funding it yourself. And that means that you're not having to make interest payments and things like that. So that's obviously quite good as well. And all the profits are yours. All the money is yours and you can do whatever you want to do with this. You can invest however much you want, and then take out whatever you want from the business. The cons are, it could be slower growth. It could be slower growth in terms of the opportunities you might get from the additional funding. And also, we all talk about when you do get funding, depending on how it's done, if you partner up with someone, and if you get an investor, there could be opportunities where you get some sort of mentorship, where you can bounce ideas off with them. And that could also help speed up that process. Whereas if you're bootstrapping, it tends to be a bit slow, but having said that, nothing to say you can do networking events. Thinking outside the box is definitely one for someone who wants to sell funds. Yep, like that. Yeah, this is something very similar we talked to coaches about when they're first starting. I mean, this is something we're going to talk about, but a lot of coaches, when they're first starting, they want to take out loans, they want to take out credit cards. But sometimes we say to them, it's better to start off with money that you already have and learn how to manage it in a way where, as you said, you've got full control, you're not going to be paying any interest and investing it into maybe networking events, maybe advertising, or maybe just getting in front of your audience and growing that way. So it's kind of growing organically to the point where, right, to get to the next level now, I may need to get out a credit card, or I may need to get a loan. But I think a lot of coaches make the mistake at the beginning of, right, I need to take out a loan because I need to pay for a website, I need to pay for this, pay for that, where there are other ways that you can do it without getting into debt straight away with your business. Yeah, that's such an important point. And there's nothing to say that you can take out other sources of funding, especially if it's a loan, things like that, because that could help you start your business and grow to a certain point where you're happy with it and then you pay off that loan. But the caveat here is you have to have, and I say a business plan, it doesn't necessarily have to be a business plan, but you have to have some sort of plan where you know that you're going to make X amount of payments and have plan Bs if that doesn't work out. And speak to specialists about that who have been through that, sports coaches, or people who help sports coaches, finance professionals, do your research because the last thing you want to do then, and as you mentioned, Leo, is having that debt from the get-go and that can sting you quite badly, especially down the line. And it could fold your business as well, if it's not done properly so. And something we talked about earlier, and I know you mentioned to me, the percentage of businesses that fail within the first year or two. So imagine you take out a massive loan and your business fails within that year. You've got this massive loan that then you've got to pay off without even having a business. So that's why I feel it's better to kind of start with what you have, whether it's just a little bit of savings and figure a way to multiply those savings and just use it to get in front of parents, advertise yourself, and just show your audience what you do and then turn those audience into potential paying clients. So then that brings a revenue into the business. Yeah, no, look, I agree. And especially in this day and age, being resourceful is key and it can be done. Brilliant. So okay, first is equity financing. So what is equity financing? So essentially what it is, is you're getting someone to own a portion of the business for an amount of money. And that amount of money, you can then help invest in your business. Now, obviously, if they own a portion of that, they're going to get certain rights to that. So the profits, they get a portion of the profits as well. And good thing about that as well is, as I mentioned before, you're working with others. Maybe they could be someone who is further ahead. Maybe they've already built an established sports coaching business. And they're now looking to help startups, but they want to invest in them, give them a bit of mentorship, own a percentage of that. That's great as well, right? And it allows them that small business to, that starting business to grow a lot quicker, have that mentorship there. And so that is obviously an option. And they could either be as well just investors, investors that want to, they may want to invest in a football coaching business where they want to make sure that they want to have more kids learning football. So they want to invest in that. So there's definitely options there. Yeah. And now we're talking government funding, right? So this is the one where a lot of sports coaching business and just other businesses alike are very interested in because. The juicy one, the juicy side. Yeah, because this is the one where there's very little downside in terms of once you get that grant. We're talking about grants here in terms of government funding. There are other types, but the main ones is grant schemes, grant, sorry, government schemes, government grants, where you get the amount of money and you can essentially use that in the business. Now, most of the time, the requirements are initially before you get the grant. After you get the grant, that is however you see fit with that. Now, there are, depending on the type of grant it is, there may be stipulations in there where you can't actually apply for another grant before five years and things like that. So that's one thing. Obviously, the good side, which a lot of people know is you don't have to give up any of your equity. You don't have to give up any of your control in your business. It's not a debt. It's not like a loan or a credit card. So, this option is quite appealing to business owners and obviously sports coaches as well. And the tricky bit with this one though is it's very competitive. It's very, very competitive because there's obviously going to be other business owners that are looking for, there's only an X amount of grants available. So, and also another thing is it can be quite time consuming because you have, there's a massive box tick exercise that you've got to do and there may be different stages. But as I said, the benefit of that once you get through that and if you do get that funding, then it's more or less the easy setting from there. Now, we're going to touch on not-for-profit. So, there are opportunities for sports coaches that want to have a bit more of a social enterprise where it's not really for profit and they want to help the community. There are options as well for funding and that's really, really good because if you want to do something to impact the community, there are options available. However, the downside is that there are times that even more stringent for obvious reasons. So, that's another avenue as well. If you're a social enterprise or looking to set up a social enterprise, there is also that option as well. Yeah, it's a good point you made because there's a lot of coaches that we work with, what they do is they have a for-profit business and then they open up a non-profit to work with maybe clients that are less well off in certain areas of the country who might not be able to afford private training. So, they run certain events throughout the year. They get sponsorship to run them and stuff like that. So, great that you brought that up because it is something that's quite common and a lot of coaches do what a lot of coaches see is that right? A lot of my parents can't afford my services. Okay, great. How can I then create something that is more affordable? And a lot of coaches go down that route of maybe opening up a branch of the business where it's more focused to where it's more affordable for parents to train. So, it might be like an event such as a camp or a clinic or maybe a league. A weekly league or something that gets more of the community involved. Yeah, definitely. And there's nothing to say that that side of that business where it's not for profit, that could also complement the actual for-profit side because you're getting more attention, you're getting more exposure, which is really, really good. One thing I would say on that is have had sports coaches that they've thought about setting up a social enterprise and having that idea of a for-profit and then a not-for-profit. And I think a common misconception is, as I spoke to a specialist within social enterprise, and they mentioned that one of the biggest mistakes is trying to have this combine it in one business structure, very hard to do because if you're mixing for-profit, your for-profit side with a not-for-profit side, it can be quite messy. And also, you're not going to get investors, you're not going to get the government, they're quite funny about that because you're mixing it. So, always good to have a separate business vehicle for that, specialising in the social enterprise side of things. Yeah, and just touch on one other thing. If you're a coach watching and you're in the football slash soccer field, something, for example, that the Premier League clubs do to separate the two is you've got obviously the club, which is a for-profit, and then what they do is they open a branch up, which is normally a foundation, and the foundation is the non-profit side, and that they go into schools, they do weekly, they run weekly sessions where they still charge parents for those sessions, but it's at a very discounted rate, and that's just more of an inclusive type of service they're offering. So, I'll take an example. If you take Fulham, you've got Fulham Football Club, which run, they've got like their profit side, and then you'll have Fulham Foundation, which is like a separate business in one, but they focus more on like a community aspect and just getting the brand out into the community. So, if you are in soccer, even if you're not in soccer, go and have a look at different clubs in the Premier League, because this is something they all do. They've got their foundations, foundation type of service, where they go into the community, and then you've obviously got the full profit side as well. Yeah, no, brilliant. And okay, so now we move on to debt financing. So, this is a very, very common one, very common one. So, looking at the two main types, which is credit cards, business credit cards, also personal credit cards. If you're self-employed, which means that you're not a limited company, you can always, there's businesses that have run successfully where they've opened up a personal credit card, and they're using that to fund their business. Now, as mentioned before, if you are a self-employed business, you and you're the non-business side of yourself, you're the same thing, you're the same legal entity. So, whereas with a company, it's different. So, there's that side of it, but essentially, you're using your credit cards to fund your business now. If we're looking at a business credit card, or even a business loan as well, it's going to be based on your financial performance. Can you afford to make those repayments? And especially with a business loan, you're going to have to show them your financial statements, show that from a financial standpoint that your business is healthy enough to make those repayments, which is obviously good. Credit card, there's less of that really. There's less of a microphone, a less of looking too deeply into your financial statements. But having said that, on both of those things, I've got clients that, as you mentioned as well, Leo, they started off with a credit card, and they're busy really, really well. And it's now time to pay that back, because the interest on that is just too high. It's too high. And it's not a good thing to have, especially in the future, if you want to expand, then you've already got a credit card, but then you want to take out more debt in the future, which is okay. But if it's not paid off a previous loan or a previous debt, it's going to be harder to find more, to secure more. So, that's always something to have, keep an eye out for. And, okay, the other one now, I thought just for completeness, friends and family. Is this your bonus? This is your bonus. Yeah, this is a bonus one. This is a bonus throughout. So, this one is very common, especially for startups, as well, is friends and family help, they invest into the business. And that could be, a gift, a gift money, or they may want to loan the business money, they may want to have a share in the business, however it needs to be. What I would say is, you know, of course, it's trustworthy, but have things in place. Because if things go wrong, they go wrong. Have it in writing. That, you know, yes, yeah, exactly. Have it in writing, make sure there's, at the end of the day, there's an agreement. And have that agreement down, you know. So, all parties know exactly what they're in for and what are the risks. Because, you know, at the end of the day, you don't want it to take a wrong turn. Fantastic. Right, Andrew, absolutely brilliant, brilliant information today. As I do on every program, I make notes as well while you're talking. So, I learn a lot from you. So, thanks for coming on again. Now, as I say to you every episode, if you were to sum up the different points you shared with us today, what would be your summary? Yeah, so this summary would be, if you're looking for funding, it's great for your business. Do it the right way. Speak to, do your research. Speak to professionals. And that can help you grow your business. But the first thing you've got to do is understanding why you want to do it. Yeah, 100%. 100%. Perfect. Now, Andrew, if any coach watching wants to get in contact with you, what is the best way for them to reach out to you? Yeah, so they can just reach out to me via our website. They can book in a free consultation call direct from my website. And, yeah, we can start a chat there. So, details should be down below. That's how they do it. It'll be in the description. Yes, perfect. And as well, if you're a regular viewer and you have any questions, drop them in the comments. This is something that we are going to be looking to do in coming up, answering any questions that you guys might have in the comments section. Gives us more data, but also gives us an opportunity to interact with you and have any questions answered that you might have about any episodes that we create. Right, Andrew, thank you again. And I look forward to our next one. Brilliant. Thanks, Leo. Yeah, I'm looking forward to it.