DEBT vs. EQUITY - THE "ANTI-EQUITY ADVISOR" w. TOM KLAUSEN
Updated: Apr 5, 2022
Tom Klausen is the "Anti-Equity Advisor". He makes the point that too many small and medium-sized business owners think that selling equity is the simplest and best way to raise capital. Tom says this could not be further from the truth.
Tom is the founder and CEO of True Viking Finance, an advisory and lending company that makes use of debt financing tools that allow owners to grow their businesses while retaining full equity! Growing businesses face many hurdles and the last thing you need as an owner of a growing business is someone coming in and diluting your equity; it’s much easier to pay off debt than to get rid of a difficult investing partner.
Tom shares examples of the strategies that he uses to solve cash flow and working capital problems, his approach to relationship building, and everything else you didn’t know you needed to know about the benefits of debt!
“I am a debt lender. I am an anti-equity lender. I focus my efforts on debt and I do not participate in equity.” — Tom Klausen [0:04:54]
KEY POINTS FROM THIS EPISODE:
• Why Tom is the "Anti-Equity Advisor".
• Challenges that growing businesses face with regard to financing.
• What a traditional lender typically looks for in a potential investment.
• Examples of debt tools that are available to grow businesses.
• An explanation of some of the hard and soft costs of equity dilution.
• Types of businesses that Tom lends money to.
• Tom’s approach to building relationships with clients in the debt financing space.
• Why you shouldn’t let anything come as a surprise to your lenders.
• An action that Tom strongly advises against.
• Tom shares an example of how debt financing will benefit your business.
• How you can build the cost of your debt into your business in a healthy way.
• An example of how equity capital can damage a business.
• Types of businesses that banks focus on lending to.
• Four factors that all SME owners should be taking into consideration.
• Characteristics that determine whether or not Tom will work with a certain business owner.
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