NFTs took the world by storm in 2021. It seemed like a strange concept to purchase pictures for outrageous prices up to tens of millions. Even more confusing, some NFT art is not that impressive or exciting. Spending fortunes to buy cartoon monkeys has become the butt of too many jokes. However, the utility (benefits or value) that you get as a holder can be lost when looking at the surface level.

The best display of solid business management is positive cash flow. Your profits are nothing to be ashamed of. They should be treated as a badge of honor.

Your customers are more helpful than a reference call or a singular number on your P&L. They're tangible assets for your business, and they can help you access capital.

Many of us know the dangers of high credit card interest rates. Some of us may have experienced the financial burden they can bring into our personal lives. The best part of using a charge card is that it requires full payment each month and prevents unnecessary debt. Using cards as a cash management tool and not a primary financing tool can unlock stable financial habits for your business and bring automation to your financial processes.

All for the low price of free.

The lowest rate doesn’t always mean the best partner. Sometimes, you get what you pay for.

The most overlooked part of a process is the reference calls, but it might be the most important. You’ll feel awkward interrogating someone who knows the partner under consideration, and you might be nervous that they won’t be honest with their feedback. You’d be surprised.

As with any good fundraise, debt, or equity, the best way to build relationships is long before they’re needed. The longer you’ve known each other, the more you’ll understand what each partner is about. Without the pressure of fundraising, you can both think clearly about what a partnership might look like. This will also allow you to see how people react or behave over time.

Despite all of the marketing that financiers do, there’s no one-stop shop for financing. Each financier has its focuses and strengths. So much time is wasted talking to firms that were never a fit from the start. Making sure you fit their funding profile will save you a lot of time and disappointment.

In the case of most companies, this was never an EITHER/OR decision but an AND. By leveraging lower-cost products in concert with equity raises, they were able to extend the time between fundraising, create more value in their businesses, and raise at higher valuations than they would have if they’d been relying on equity financing alone.

When choosing between different types of financing, it can be unclear how the costs compare. Therefore, we’re going to keep it simple (for now). It may not be the most precise analysis, but it will serve as a consistent tool for a quick comparison of options. We will convert all financing options to a simple Annualized Cost Percentage (ACP).

Before taking any financing, ask yourself, "what is the cost of using this money?" Too much debt service can leave your company with too little cash to invest in growth. But, maybe, more importantly, selling too much equity can leave the common shareholders at the bottom of the capital stack, with little to no reward for creating a fantastic company. Optimizing both is a winning strategy for building a stable business and creating value for everyone involved.

A quick primer on forecasts: create a forecast that looks like the inverse of your Capital Stack. The higher someone is on the Capital Stack, the more confidence they’ll want that the business is performing to plan. Therefore, you should adjust the aggressiveness of the forecasts for the audience and their relative position in the Capital Stack.

Unlike equity investors, lenders will require Covenants. Covenants are effectively a promise from the company to meet specific metrics, like maintaining defined performance thresholds (e.g., a minimum amount of revenue or cash flow).

Your income statement and balance sheet will only get you to the starting line with lenders. But, sharing more data, like metrics and KPIs, that you use to drive your business can help paint a complete picture of how your business is performing.

When preparing to raise debt, you’ll want to focus on your numbers. Unlike Angels, Seed Funds, and VCs, lenders rely primarily on the underlying numbers of your business to make funding decisions. The numbers tell the story, not your deck or elevator pitch.

Both debt and equity have their place in the pantheon of options for funding and scaling a business. So please keep in mind: the business, NOT the financiers, should be driving the funding strategy. The company's incentives will never be perfectly aligned with either debt or equity providers.

A company's "Capital Stack" is the legal rights that others have to your business assets in a downside scenario. It prioritizes who gets paid first and who gets paid last (if at all). Debt always sits in front of equity (VCs) repayment.

Unlike equity, which has relatively undefined and uncapped payback, debt requires a company to make required loan payments or "Debt Service" regardless of the company situation. For this reason, it is always essential to closely evaluate any obligations that the company takes. Taking on too much debt and being unable to service it can be dangerous for the company and its shareholders.