Capital Now Co-Founder and CEO, Gerry Wawzonek, gives us his best insight on 10 critical small business questions. Listen now!
Katie: Welcome to another edition of the special Capital Now leadership interview series. Today, we’re catching up with Gerry Wawzonek.
Alright, I would like to welcome the Capital Now listeners to Ten Small Business Questions with Gerry Wawzonek. My name is Katie and I am the head of special projects at Capital Now and I’m pleased that we have Gerry here with us today. Gerry, are you excited for our visit?
Gerry: I most certainly am.
Katie: Excellent. Before we get too far, I’d like to give you a formal introduction so everybody has some context for our call, would that be alright?
Gerry: Yeah, sure.
Katie: Excellent. Mr. Wawzonek graduated from the University of … You’re gonna have to help me with the pronunciation of this Gerry. University of …
Katie: Guelph. Excellent.
Katie: And where’s that located?
Katie: Let me pause for a moment and share with you my surprise. Excellent. So the University of Guelph with a bachelors of arts degree. He was registered mortgage broker agent for Access Capital Partners, HSBC and CIBC over a 15 year period. In 2007, Mr. Wawzonek founded Capital Now Incorporated formally PGB Incorporated and has acted in all aspects of the factoring business including underwriting, funding, administration, collections and investor relations. Mr. Wawzonek’s position involved the establishment and revision of all corporate documents, development of best practices, implementation of industry specific software and automating the banking process. Since 2015, Mr. Wawzonek has been certified as a factoring account executive by the International Factoring Association. Is there anything else you would like to share to that … With that illustrious biography, Gerry?
Gerry: No, not really. Maybe just a note about the designation. It’s really tough. It’s the only designation for an industry in the world and there’s no exam, you have to be a factor for two years and you just challenge the exam. 40 percent fail and I think there’s 67 worldwide. There’s three in Canada and Natalie and I are two of the three.
Katie: That is exceptional. You’re referring to the factoring account executive.
Katie: Is it a credential, or a certification?
Gerry: Yes, it’s a certification. It’s the International Factoring Association’s certification. It’s extremely hard. Sorry. There’s a lot of non-Canadian context in there, so we have to know about the US system as well as the Canadian.
Katie: That’s exceptional, so you say that there are only 67 worldwide and three in Canada and two are at Capital Now. Those odds, that’s gotta be better than an ivy league university, right?
Gerry: I challenged the exam, not because I really wanted the qualification, but because I wanted to know how … What my level of expertise was. I’ve never worked for another factor, frankly I don’t know what I don’t know. I really at that point didn’t know my understanding of really our own business.
Katie: Well I think it’s probably safe to say that you are definitely an industry leader now.
Katie: Okay, well we’re actually going to jump into what might be the most difficult question that I’ll ask you today and that is complete the sentence, if you really knew me you would know …
Gerry: Oh boy. Well I read magazines backwards. It might seem silly, but it saves me a lot of time. I don’t know when I started doing it or why. Maybe it’s a left-handed thing, but when you read it backwards you get the summary of the article or the piece in the last paragraphs anyways. It’s kind of like an executive summary. So if I see the end of an article, I can decide whether I’m gonna spend my time reading the whole thing.
Gerry: Kind of like the Harvard Business Review, the Harvard Business Review puts the executive summaries in the back and they do it for you. But this is a way of doing it for other magazines.
Katie: Excellent, that’s really clever. That’s really clever. Well with that, should we do the last question first then in honor of that? Just teasing.
Okay. So our first small business question we have is, a growing business needs to be smart about its money, how should small businesses prioritize what to invest in or prioritize their growth investments?
Gerry: Well, I actually look at this the other way around. I think there’s something more important in where they put their investments. That is how to stay safe with their customers. We see it all the time and we have clients like this, they have too much business with one customer. If you have 100 percent of your business with one customer, you might as well just admit that you’re working for them. They can change the terms, they can change the price, they can change their mind. You’re absolutely at their mercy. So get at the very least three customers. I don’t get comfortable until they have five.
But beyond that, if it is at all possible, focus on recurring products or thinks that you can provide that have a subscription or a repeat payment. It’s a really good way to build up a revenue stream and it’s like getting paid … You sell it once and you get paid several times. Not enough people concentrate on that idea that residual income, while it starts out slow and small, builds up to something quite nice and your efforts can actually … You can stop working at some point and still get paid.
Katie: Excellent suggestion. Can you give an example of how you’re seeing a subscription service like this used in the oil field currently?
Gerry: I know it’s kind of self-serving, but if you refer a client to Capital Now, you get residual income. You get paid every month based on what that client receives in payments for the life of the client. So if you send us a client that’s doing let’s say a million a month, you get 25 hundred dollars a month for the life of the client. It really … One of our guys, Harold, he’s been paid I think 80 thousand dollars for a name, and a phone number.
Katie: Exceptional, wow. That’s incredible.
Katie: I don’t think it’s self-serving, this sounds like a really great opportunity for some of our listeners.
Gerry: Yeah, I could’ve said that insurance salespeople get a residual every time you make a premium payment and they do. That’s how they build up their portfolio or their book. But yes, I think that you could do well with us.
Katie: Excellent, well good to know. If anybody has any questions about how that referral program works they should reach out to you directly Jerry?
Gerry: Yeah. I would like to invite people that have any questions about how to present it or how to say it or what not to say is probably more important, I’ll be happy to do it. I’m gonna do some newsletters and stuff to that, but if anybody needs anything right away, let me know.
Katie: That sounds like a really good idea and a really great opportunity. So, listeners, if you’re curious for more information reach out to Jerry at Jerry at Capital Now dot CA. We will move on to our next question, which is, how have you overcome personal challenges in your business and what advice do you have for other business owners?
Gerry: Find somebody more successful than yourself and then ask for their advice. Then most important thing, act on their advice. Mentors are always grateful for people asking them advice, but sadly even in my own experience, people don’t tend to act on the advice. There isn’t a lack of mentors, there’s a lack of mentees. So you want to be somewhere that you’re not, find somebody that’s there or close to being there and ask them for some advice. You’d be surprised how generous people are with their time and advice if they can see that the people are actually following through.
Katie: Good concrete suggestions. Okay. That brings us to question number three. What criteria should a business owner consider to determine whether a loan or a cash infusion would be a good decision to grow the size of the business?
Gerry: I would always choose the option that did not involve equity and retaining your ownership for as long as possible. Because as your business grows hopefully, the value of that equity goes up. So in the beginning, giving 15 percent away and you’re not gonna get very much because you’re small, doesn’t seem like a big deal. But later on it’s going to be very, very expensive.
Having said that, it’s even worse to have partners. Partners are a horrible thing to do if you want any say in your own business. So I guess I would say be patient and work hard, you can take on debt, but don’t give away equity and don’t let anybody else come in around your business because they’re gonna tell you how to do it and they may not know what they’re doing. It’s happened to us. We used to have a partnership and it was a disaster.
Katie: Okay. Wow, sounds like there was a lot of value gained through that lesson you’re referencing.
Katie: We’ll talk about that in another interview, right?
Gerry: Okay, sure.
Katie: So next question we have, what’s the best way for entrepreneurs to demonstrate that they’ve thought through the essential aspects of their business, especially the financials?
Gerry: Okay. You have to know your numbers, front, back, upside down, forwards. You have to be able to answer those questions off the top of your head. You have to have considered every single aspect and cost because you’ll be challenged on your cost and your assumptions and your projections. But more over, if you get past that, then you have to understand your risks and you have to be able to designate that you’re a subject area expert, especially with lenders and investors.
The second thing is you really need to know your lender, if you’re going that route. Understanding their knowledge and experience would be really helpful, knowing what kinds of deals they fund and don’t fund. This gets ignored most of the time and most of the time people are presenting inappropriately to somebody that knows a lot more than them or never does deals like this. You really need to get to know who you’re pitching to first. That doesn’t happen, most people just focus on what they’re going to say, but they have no idea what the person wants to hear.
Katie: That’s some really good insight. So can you give an example or a suggestion of how people can get to know the motivation of the person they’re going to be pitching to?
Gerry: Well the internet is an excellent resource because if they’re … They’ll have a bio on their company page presumably. LinkedIn is a great result. Do Google searches and go two or three pages in and you might find things. If the person is an active investor, you can find something great. If not, it would be helpful to find somebody that you both know in common and ask them.
Katie: Good suggestion. Okay. Next up we have, are there a few rules of thumb you could share with us that would help a small business owner differentiate between good business borrowing versus bad business borrowing?
Gerry: Okay. This is a general question, but the criteria I use is simple. Good business borrowing gives you choice. Bad business borrowing locks you in or even worse, dictates how you run your business. So whichever one is gonna leave you with choice and the ability to make your own decisions.
Katie: That’s a really good criteria and you’re right, it is very simple. Can you give a couple examples of where a person might get locked in? What does it look like when they’re locked in?
Gerry: Okay. We had this actually. We had a line of credit with another factor. They knew our business, but they didn’t know how it ran in Alberta. Because of the way they did their borrowing was based on a month to month basis, they measured different things than we did. So we had to start taking on deals that met their lending criteria rather than the deals that we wanted to do. We ended up taking on business that we wouldn’t normally do. So there’s kind of this principle that when you have a lender, you have to concentrate on what they’re going to be concentrating on. So a term loan, nobody cares, you just make your payments. A partnership or a deal, a margin deal like this, the lender gets much more interested in how things are going on a much shorter scale, on a month to month basis.
Katie: Excellent, good example. Thank you for that background.
Katie: Okay. The next one has been a really interesting question for the other leaders I’ve interviewed. Many small business start out as either a family run or business owners hire family members for a variety of reasons. What is your advice on what to do when you have to lay off or fire a family member and how can you do that and maintain peace?
Gerry: I was brought up in a family run business and you might not expect this answer. Fire them sooner than later because they’re family. A lot of times the family members don’t make a good employee. But you can always just rehire them if there’s a change or they have a change of attitude or there’s a new role. But having family members in reserve is actually a hidden asset because they know the business, they have your interest at heart and if they’re not too mad at you they’ll come back to work without any [inaudible 00:14:55]. They’re not gonna sue you especially if they’re still living with you.
Gerry: It’s safer. It’s an ace in the hole, you don’t have to play it. Of course, they’re gonna support you, especially if you’re the parent. Brothers and sisters, a little different. But if it’s a parent, child or even husband and wife I would say, letting them have some time on the outside working for somebody else normally brings them around.
Katie: Okay, so I’m just gonna move us on to the next question. Was there any deal you regret investing in, even if you made some money and why?
Gerry: Yes. Investing in friends, don’t do it. It’s the worst thing you can do. Every single time I’ve lent to a friend I lost the money and the friend. As harsh as it may sound, they’re not gonna treat you like another lender. I’ve seen it over and over, I’ve got other friends in business … People I know in business and it never works out.
Katie: So no investing in friends, I feel like that’s some pretty solid advice that will resonate with a lot of people.
Gerry: When I was selling electronics there was a saying that good customers got a discount, normal, let’s say average customers they paid full price and friends and family pay more.
Gerry: Because a friend or family will call you in the middle of the night or on a Sunday afternoon if their stereo stops working.
Katie: Mm-hmm (affirmative)
Gerry: Where they wouldn’t do that with a stranger. You’re always gonna have expectations on you that they wouldn’t have on a stranger. It’s just not fair, really.
Katie: Good insights there. Alright Jerry, so our next question is, how can a mentor help a small business owner and do you or did you have a mentor?
Gerry: A mentor is invaluable to a small business. I had one, actually he didn’t know he was, but my mentor was my dad. As I mentioned, we were a family business and he was two things, he was a good example and he was a bad example at the same time. There’s a lot of things I do that are the complete opposite of what he would’ve done. But his principles were rock solid on his product, it was food. We never agreed on execution of how things were done, but he always was focused on one thing and that was the quality. He had a good foundation, on execution we’re completely different. But he never saw himself as a good example or mentor and I might do a series of newsletters on, he had a really unique way of doing business and there’s some insights there.
Katie: Excellent. Excellent. That does sound like an interesting story. Okay. We have next, how do you deal with exiting your business when you have a business partner who isn’t ready?
Gerry: That really depends on the nature of the partnership, based on my own experience. Hopefully this is gonna be contemplated in advance and there’s an agreement of some kind, at least a shotgun clause, but preferably something more robust so there really wasn’t any negotiation. But generally I would say what makes it easier is if you can find somebody to step into your shoes. Put somebody new in your spot and the business can keep going and you’re not causing a hardship, if you can pull that off. I’m not saying it’s easy, but I think that’s the only thing I can suggest.
Katie: Good suggestion, that suggestion of putting somebody else in your spot.
Katie: Exiting a business is a tricky situation and if you can find somebody to take your place, it sounds like it would help move things in the right direction. Good suggestion, good to know that. Our last question is, now that I’ve got a website up and running, what are the top three things I can do to start generating sales leads?
Gerry: I’m just learning about this myself. But what I would say is look for places where your clients are. So if all your clients have to use a certain software platform, if they have to all be a member of a certain association, even if they all attend the same trade show is get to where they are and where they’re concentrated. The other thing is if you have … So that can be becoming a member of their association, for example and posting on the industry website, for example. The rest of it is kind of … There’s a lot, but it really, really depends on the nature of the business. Sometimes the business is geographical in nature and that gets a little harder for promotion. But for more general ideas on marketing, I would say read anything you can by Jay Abrahams. He’s not really well known but he’s the most brilliant marketer I’ve … He’s the most brilliant marketer you’ve never heard of. His ideas on co-op advertising and contra and getting referrals are spectacular. I’ve read everything of his and it’s all applicable and is very straightforward. Jay Abrahams, you might be able to find some of the stuff in print, some of the stuff is online.
Katie: Excellent. Is that A-B-R-A-M-S?
Gerry: No, A-B-R-A-H-A-M-S.
Gerry: How I found him was there were some good online marketers that … You can tell whose good just by the emails that you get. I went and researched their source material. Three of the best ones that I heard referenced this guy. It was remarkable. When you look into the source of this information, these guys acknowledged on the front page of their book, thanks so much to Jay Abrahams. Then they literally just rehashed his material. If anybody wants to know more about it, I can put together a book list, a reading list for that.
Katie: Excellent, that sounds like some really good resources and yeah, if you do want to provide a couple links and resources, we can be sure to link them up in the show notes.
Katie: With that said, to help us wrap up Jerry, can you share with us where our listeners can find you if they want to give you feedback on your interview or get any clarifications on anything that you said, what’s the best way for people to get in touch?
Gerry: Please give me a phone call. Don’t give it a second thought. If I can pick it up, I’ll pick it up. If I can’t, I can’t. If you get emails from me, there’s a link to my calendar on the bottom of my … At the footer. You can go in and you can schedule yourself a time for an appointment if you don’t wanna just take a chance calling me out of the blue.
Katie: Excellent. What’s the best number to reach you on Jerry?
Katie: Excellent. We’ll have people followup with you there. And your email address?
Katie: Wonderful. So if anybody has anything that they’d like to share with you, give you a huge virtual high five for your excellent insights in this interview, they can do so at your cell number or your email. With that, that brings us to the end Jerry. Anything you’d like to share as we say goodbye?
Gerry: No. This is going out to my team, thank you so much for everything you’ve contributed. We’re doing really well and there’s no way I could possibly have done it without everybody that’s here. Thanks for the hard work.
Katie: Excellent, excellent. Well that’s a wonderful share and I really appreciate your time and your insights Jerry. Have an excellent afternoon.
Gerry: You too, thank you. Bye.
Katie: Alright, bye.