The Doing Business in Bentonville Podcast
To create an ecosystem that connects leaders of all kinds – industry, community, student, educational, civic, investment and entrepreneurial – to help overcome Omnichannel Retail barriers through exclusive, insight-rich content.
The Doing Business in Bentonville Podcast
Ep. 82 - Maximizing Growth Potential through Smart Capital Solutions
Discover how access to capital can transform your business journey with insights from Rohit Mathur, CEO of Bridge Marketplace.
Rohit joins Scott Benedict break down the barriers small and medium-sized businesses face in securing the right financing and reveal practical solutions to manage working capital effectively.
With Rohit's expertise, you'll learn about innovative tools that simplify the lending process, empowering you to focus on growth rather than grappling with financial quandaries.
Scott and Rohit explore the dynamic world of small business financing, highlighting the significance of planning your financial needs well in advance. Hear about the role of Community Development Financial Institutions and their favorable lending terms for emerging brands. Be inspired by success stories that underscore the importance of transparency and honesty in financial dealings, offering invaluable lessons for navigating the competitive market landscape.
Prepare your business for retail growth success with actionable advice on accessing capital and choosing the right lenders. Steer clear of high-interest pitfalls like merchant cash advances by understanding their long-term impact. Equip yourself with the necessary documents, craft a compelling business narrative, and start the funding process early. With resources like Bridge Marketplace at your fingertips, you’ll be well-positioned to seize growth opportunities and succeed in this Digital Front Door episode from Doing Business in Bentonville!
Well, hello everyone and welcome to the Digital Front Door. I'm Scott Benedict. You know, one of the benefits of the times that we are all currently living in here within the retail community is the fact that digital technology, and, more specifically, the growth of e-commerce and the marketplace selling platforms that proliferate out in the community, has really given rise to a new era of entrepreneurship in our country, and, in fact, not just here in the US only, but around the world. Small to medium-sized businesses are taking advantage of the technological innovations of our era, the times that we are living in, to provide great new products and great new services to consumers that might not have had the opportunity to be created and to prosper in another era that they have in the marketplace that we exist in today. Indeed, many of us that call Northwest Arkansas home are reminded every single time we visit the Bentonville Square that the largest and most successful retail company ever created began as a single store five and 10 cent store operation in 1950 here in our community. Now, for all of the wonderful entrepreneurial stories that exist within our industry and that our industry has certainly produced and continues to produce, there remains a roadblock to growth of small to medium consumer brands in their more formative stages, and that's access to capital. Now, whether they need funds to purchase inventory to fill a retailer's purchase order or to finance marketing activity central to their growth and to the growth of their brand, or if they're a marketplace seller that needs to be able to buy inventory to resell those business growth opportunities are traditionally constrained by lack of financial resources, and each of these entrepreneurial ventures will likely succeed or fail, based not on the quality of their product or on their marketing strategy, but on their ability to fund their growth and invest in their business.
Speaker 1:Now, a lot of companies that I encounter don't know where to start. Is the bank where they have their business checking account really the best fit to help them grow their business? How can they know if they're dealing with a lender that really is giving them the best deal and is operating in an ethical manner? So, with so much potential for growth in this era of omni-channel retail, it feels like the challenge with access to capital is something that someone, somewhere, should step forward to address. As it turns out, I know just the person and just the company that I think can help. I recently had an opportunity to meet a firm called Bridge Marketplace, and they have emerged as a pioneering force in the world of finance and with a particular focus on small to medium brands in the retail space. They pulled together traditional expertise in commercial banking with some pretty cutting-edge digital technology to provide some of the emerging brands out there with an extensive network of lenders, and their CEO, rohit Mathur, joins us today. Rohit, welcome and thank you for joining us Well.
Speaker 2:thank you so much for having me, Scott. It's a great honor to represent Bridge here on your podcast and talk to people about access to capital and what we can do for small and medium-sized businesses here in the US.
Speaker 1:Well, good, I thought maybe we'd start the conversation today with maybe having you give us just a brief overview of how it is that Bridge came to be, what you think makes your company so unique and what type of businesses you and your team try to serve.
Speaker 2:Sure, sure. So you know, I was a banker for 10 years and a lot of my time was spent helping kind of larger companies get access to capital, and I always tell people this you know my job used to be I worked for one of the large four banks, right, my job used to be to go and find capital that these companies could get, present that capital to them. As I was leaving, one of my competitors from another bank would be walking in and doing the same thing, and these large companies really got to pick, right. So they were sitting in their office and they got to pick from four or five or seven options and say, hey, I want that one. And what we noticed was that that wasn't available for small and medium sized businesses like it was for large corporates. And so you know, you know where I was.
Speaker 2:We started this program called Bridge and then spun it out of that company, you know, and have have that bank and many other banks be able to continue on as investors with us, and many of them on our platform as well.
Speaker 2:But at the core, what we do now is we have a technology that allows these business owners to come to a one-stop shop and seek what options are out there and then pursue one of those options based on what their needs are. So a business owner can come in, enter in some information, then we have our marketplace of lenders that gives them responses based on that information and what they want, and they can pick the lender that's best for them, best for that company, and then move forward on our platform. So that's the core thesis here. Who are we trying to help? We are trying to help partners of Walmart suppliers, best Buy suppliers, dollar General, verishop, Hilton, chipotle. These are all corporate partnerships that we have as an organization and all of their suppliers have access to our platform. The platform is also public, so any supplier for any corporate in America can come to our platform and use it to get access to capital.
Speaker 1:You know it feels like such a logical way of doing things and yet until you and the team kind of pulled that together, it didn't really exist and certainly not exist with the kind of options that you and the team provide companies, certainly not exist with the kind of options that you and the team provide companies. I'm willing to bet that there are some, probably some recurring challenges that you see that small consumer brands or marketplace sellers are facing in today's business environment. Can you share, maybe, what some of those observations are?
Speaker 2:Yeah, I think three right. One, I think, if you look at the last few years, we've had very high interest rates, right? So prime rate is usually a good way to think about rates in general and prime rate I always put a chart up of prime rate has been at 8.5%. It's recently come down over the last few quarters to 7.75%, but that prime rate is higher than it's been in 15, 20 years. So high interest rates obviously mean higher costs if you want to borrow.
Speaker 2:So I think there's been one which is kind of more of a macroeconomic challenge that small and medium-sized businesses have faced, I think. Two, that we hear about a lot is the working capital challenge, right. So I think business owners have so much going on, right, you have to go and sell to these big brands. You have to manufacture. You've got 10,000 jobs in one, right? How do you also think about the financing aspect of it ahead of time, right? So a lot of people think about the financing when it's like, well, I need to pay my manufacturer. Okay, well, how am I going to get the money to do that? And that's often too late. So how do you think about it before that time? So that working capital cycle is really important. That's kind of true it is.
Speaker 2:You know, a lot of small and medium-sized businesses don't truly appreciate all of their working capital challenges in the first one or two times they're selling. Then they finally obviously realize it. And I think number three is how do I do all of this without making it my full-time job? So you've already got so many things you have to do. How do you also not become a person who spends their whole day looking at financing options? And I think that's one of the challenges we constantly hear is, I think, scott, the way you started the podcast right. Are you supposed to just walk into your community bank, right? Or are you supposed to go to one of the other 4,500 banks in this country? How do you even find them? Are you supposed to pick up the phone and call them all? Like, how do you do all of that work right in an efficient way to find what you're looking for?
Speaker 1:Yeah, I can imagine. I've seen that on my own entrepreneurial journey. But in working with small suppliers when I was a retail merchant, it just feels like it was a recurring theme and there weren't the kind of options that now you and the team have provided. So I was so excited to see you doing that At a high level. How does a potential bridge client maybe a startup brand or marketplace entrepreneur, how do they work with you and the team to find out what kind of capital they might be able to access for their business?
Speaker 2:Yeah. So there's two ways to do it right. One is you can go to the website bridgemarketplacecom or if you're a Walmart seller, it's walmartbridgemarketplace or bestbuyerbridgemarketplace or whatever, right. So you can go to the website. You can enter in the questionnaire, which takes about 10 minutes. It's really straightforward. It kind of asks you intuitive questions about your business. It creates a business summary for you. By the way, you can download that business summary, share it with others.
Speaker 2:If you want to just have a nice looking summary about your business, we offer that kind of free of charge for you to look at, but based on what you submit and what you tell us your needs are. So if you say, hey, I have a big shipment coming up and I need money for inventory, we then on the other end of that marketplace have hundreds of lenders that we can match essentially, who say, yes, I want to lend to companies who need inventory financing, right? So that's the kind of secret sauce that we have, which is we talk to lenders about what they're looking for in terms of who they want to lend to, and then we ask borrowers what they need, and then we are the matchmaker of getting that done. And then, of course, there are various other steps to getting that loan that we help you through, such as uploading documents and setting up meetings and things of that sort. So that's the primary way, right, visiting the website, getting started.
Speaker 2:But also sometimes people just want to chat, right, and they say I'm not sure of what the answer should be to this question, and so we offer a bunch of resources and we'll put you know, we'll put them in the show notes here of just a link right, and so you can get on a calendar. You know you can set up time with someone on our team that is based either in, you know, kansas City, north Carolina or New York, and someone will talk to you and say you know, tell me what you need and let me know if I can be a sounding board for you. And we love doing that, because we love talking to small and medium-sized businesses and learning about you know how we can help.
Speaker 1:And that makes a lot of sense, and I think that not only offering options, but offering the guidance and the advice to a small business is probably a pretty valuable aspect of what you do. Now, once a potential client of yours completes this request process, gives you all their information. What kind of capital products do you typically offer, either to a marketplace seller or to a brand supplier who's trying to sell into Walmart or another one of your retail partners?
Speaker 2:Yeah, that's a great question, Scott. So you know, I kind of try and divide businesses into segments, even though that's hard, right. So you know you could be an emerging brand, right? So you're just kind of starting out. You've got your first order, you're on the marketplace and you're starting to sell right, different capital options available to you, versus a brand that has grown and is now more in the growth stage and has received the third purchase order from one of these retailers and they're selling on the shelves, right.
Speaker 2:So I think, if you think about it, from the smaller to the larger ones, on the smaller end, we have a bunch of two products that I love talking about. One is CDFIs. People don't know what CDFIs are. These are nonprofits that are lending to small businesses. So, just as you can imagine from the name, they're not trying to rip your eyes out in terms of interest rates and things of that sort. Their goal is to help small businesses prosper, and so, you know, while they're hard to find, we've got a number of them on our platform, and so, a lot of times for these smaller businesses that are just getting started, we talk about CDFIs, right, community Development Financial Institutions that basically can lend money up to 150, 200,000 to help that business at that early stage, right?
Speaker 2:Another product in that space is revenue-based financing. Now, this is a little more pricey at that, so we always warn people about hey, make sure you know what you're getting into here. And revenue-based financing essentially means they'll look at the amount of revenue you've made on a marketplace for the last six months, let's say, and then be able to lend you money, kind of front you what you would have made in the next four or five months, right. So those are interesting products and kind of what's available for that emerging business, while you don't have that operating history or two or three years of financial right. As you grow you will start having that. So now you will have two or three years of operating history. You will have purchase orders at times and the products we love to talk about in that space of that growth company, right. So you've been in 500 Walmart stores and all of a sudden they say, hey, your product's amazing, we want you in 5,000 stores. What do you do? You've got to pay for a bunch of inventory, right.
Speaker 2:And that phase the products that I think are interesting. One is purchase order financing, right, people don't know a lot about purchase order financing. Everyone knows about a bunch of SPA loans and things of that sort, but purchase order financing is great because it is focused on financing your purchase order, your inventory, your cost to manufacture that inventory early on, and we're probably the most comprehensive marketplace of purchase order financing in America. We've got all types of purchase order lenders on our platform. We know exactly what they're looking for. We can tell you within 12 hours what you could probably expect to get on our platform and at times it's instant right. The second you click submit you'll get a response saying this is what you get submit, you'll get a response saying this is what you get.
Speaker 1:You know it's interesting and purchase order financing specifically is one that in not only some of my conversations with my supplier back when I was a retail buyer, but also some of the firms that I see coming out of Walmart's open call event or some of the other kind of early days opportunities where it's like, well, the wonderful problem has happened, You've landed your product with Walmart and now you have to be able to have the capital to go out and build that product or acquire some of the raw materials or perhaps finished goods. So can you dive a little bit deeper into that one? Because it feels like for a lot of companies that are just getting started with Walmart or another retailer, they don't always know that that kind of financing exists and it feels like it would be a big help, particularly as you're trying to grow perhaps your store account or become a bigger presence of a more valuable supplier to a company like Walmart.
Speaker 2:Yeah, and look, I love the open call event, right, being in Bentonville every year. We'd love going for that, right? I think, yeah, I think that that product is so important because I think a lot of people really think about factoring. A lot. Everyone talks about invoice factoring, right? Well, you can only get the invoice when you deliver the product to these big corporates, right, and you can only deliver the product if you can pay for the inventory and if you can pay for the raw materials or the manufacturing or whatever, right.
Speaker 2:And that's why purchase order financing, or even contract financing, is so important. Right, because when one of these large retailers gives you a contract or a purchase order, that's when you need the money. Right, that is your point of need to get capital so that you can pay for all of that stuff and kind of move forward. And so that is exactly the need that is answered by purchase order, right. Why is that the best product at that point? It's because you don't have the historical performance. You haven't. You know, when you're on your you know 500th purchase order, right, and you've already got all the profits and all of that. There's different products that are probably better, right, but when you're on your second or your third or your fifth purchase order. You don't have the historical performance to say, hey look, I've been doing this for three years. You can only point to the last two or three purchase orders you've done, and that's why that product is so specific. It's short term, it's the right kind of capital.
Speaker 1:And we're excited to offer that on our platform. I bet that, with so many options available and so much opportunity out there, you probably, I suspect, still encounter firms that for some reason you can't find a solution for, you can't help, and I guess my question is one is that perception true? And two, is there any recurring themes or recurring learnings from that that you maybe would share with our audience as a guide or a great learning?
Speaker 2:Yeah, yeah, look, I wish I could say we have 100% record, right? No one does. We definitely don't, right? I think there's two points I'd share right. One typically, when you know, typically, what we started with, you know entrepreneurs have so much going on, so getting a fast no is very valuable than kind of getting a yes and then finding out six months later it's a no right. And so the number one thing we talk to entrepreneurs about is being totally upfront and honest about your financial picture. Right, when you are a smaller business, any loan you're going to get, I don't care what people tell you. Right, most loans you're going to get are going to have some sort of personal guarantee. Right, that means they are looking at you as a individual and they're saying, look, this business is only going to do well if Scott's running it. So I need Scott to stay in this thing. Right, I need Scott to say here, you know I'm putting my personal guarantee behind this business. Right, and obviously that means they have to look at your personal financial statements, your credit score. Look, there are a lot of options available for people who've been impacted by it. Now, so many people have been impacted by things that have impacted their credit score right. But I think the number one thing we talk to people about is being upfront about it right. As long as you are upfront and say, here's what happened, here's my credit score and this is where we want to get stuff done, it can work.
Speaker 2:One of my favorite stories is a Walmart supplier actually who, you know, when he was young, got into some trouble and had some incarceration history and obviously had some credit impacts but had kind of turned his life around right. He came out, he kind of built this incredible business, started selling into Walmart was really, you know, really a good story right, where someone had actually, you know, had some misfortune when he was younger but then as he had matured, kind of really learned and grown as an entrepreneur and as a person, and obviously he got a bunch of no's because everyone you know would look at that history. But he's always upfront about it Right and and kind of talked about here's what happened, here's where I am today. This is where I want to go and one of my. You know, the reason I love talking about that story is because it was a success story Right.
Speaker 2:He got he got a small loan to start with. He was able to use that to get a bigger loan. And now you know, I think he's in Walmart stores as well, and so it's a great lesson, right where he was upfront, he talked about his history and was able to leverage that history to get what he needed. But yeah, to directly answer your question, you know, yes, we do see people we can't help. Our job is to be up front with you and tell you what is possible, what's not possible, and the biggest reason we see people we can't help is where people kind of hide information. Right, as long as you're up front, but it will be up front with you on what's possible.
Speaker 1:And that makes a lot of sense because I think if you're a lender in a small business, you know that they're not going to have the balance sheet that Walmart has.
Speaker 2:Right.
Speaker 1:Yeah, and so it's better to be up front with those lenders, it sounds like, than trying to hide something to be sure.
Speaker 2:You know? One more point to that People always, you know people think lenders are great at due diligence. They're going to find out. If there's something there that they want to know about in your past, in your history, in your business history, they're going to find out. You just might as well have them find out early and screen it and say yes or no.
Speaker 1:They'd find out from you, right? It's better if they find out and you and find out from you, right, there's better they find out from you.
Speaker 2:Absolutely right. Just imagine you know you spend three months, you send documents, you're at the goal line, you've made all these plans because of that, and then they find out the one thing you didn't want them to find out and it's like oh man, now we can't do something. Not a good outcome for anyone, right? So I think that's important. It's amazing Lenders always find out all the stuff that they want to find out.
Speaker 1:Well, and that turnaround story is a great success story. But I'm wondering if you've got any other success stories that you've been able to help, kind of in the early stages, get the capital they need and grow their business, either with Walmart or some other retailer. Maybe an inspirational story you could share of someone that you've really been able to help?
Speaker 2:Yeah, we have a bunch of success stories on our website that we love talking about. I think one that I'm really very keen to talk about always is Dr Lisa World of EPI. They make toys, dolls and great products for kids, and some of their stuff was doing well at Walmart and they said, hey, we want to sell more of this stuff, and how do you support that growth? Right, and they were this classic growth story where they'd done all the hard work, they had been able to sell through and the sell through was good, and so they were getting more orders and we were able to work with them, get them purchase order financing, and I think they'll be the first to admit look, it's bumpy to get this stuff done. Right, it's not like, yeah, I want purchase order financing. Here you go, here's the money tomorrow morning.
Speaker 2:Right, it takes a little while, you've got to get a bunch of documents, but once it's set up, it works really well, and so now they are able to get their purchase orders financed. The second that purchase order is delivered. So the order is delivered, it turns into accounts receivable financing. They get that financed immediately, and so their working capital cycle has gone down significantly, which is helping them grow and service more clients. So I love that story A because they make some pretty cool products toys. I just have a new niece and so I tend to look at more toys than I probably ever did in my life, and so they make a cool product and it's a great story, with Dr Lisa herself being such an inspiration to me and others.
Speaker 1:So, in addition to the advice of always be transparent with potential lenders, what other advice from your history and doing what you do do you have for entrepreneurs in the retail space, not only about how to get access to capital, but maybe even what kind of lenders that they should look to stay away from?
Speaker 2:Yeah, yeah, I think. Look, I think I'll answer that first, right, I think, in terms of lenders you want to try and stay away from, there's a lot of. I think. People talk about merchant cash advance, right, and look, there's a lot out there which will be anything that tells you you can get money in 24 hours. You'll probably regret it in 25 hours, right? Anyone that's giving you kind of quick capital is probably doing it at a very high interest rate.
Speaker 2:This is not me. You know passing judgment on that lender. They know what they're doing, they're trying to make return and there is a space for things like that. But I would just say, be very careful of what you're getting into, because a lot of times you can get into these financing agreements that you know may seem great because you're going to get the money tomorrow morning, but they might kind of, you know, handicap you in the future from your growth, right, and maybe impact how you're able to grow, because you have to constantly pay a percentage of your revenue away to this merchant cash at path lender or the rates are too high or things of that sort, right? So I think that's the types of lenders if I had to pick one to kind of at least be aware of and make sure you know what you're getting into.
Speaker 2:But I think, besides that, the things that I always talk to people about is three things right? One is get your documents ready. Right, I don't care which lender it is in America, they're going to ask you for some documents, right? Whether that is an electronic document, so connecting to your bank statements, or whether that is actual. You know physical documents like your historical tax returns, right. So have a folder on your computer with your documents, right. So your business tax returns, your if it's personal tax returns personal tax returns with your business information in it. You know your last few years of operating history, any orders you receive, you know things like that. So even customer reviews, right, so have that. Have the base document ready, projection model right.
Speaker 2:Make sure you've got an idea of hey, you're going to give me this capital, this is what I'm going to do with it, right, I'm going to use it to buy inventory or to hire two people or whatever. So that's one. Two is get your story ready. You know, almost universally small and medium-sized businesses have an incredible story, right? I mean, it is hard starting a business, right. It is hard to kind of say hey, I'm going to manufacture something and I'm going to go sell it to one of the largest retailers in the world, right, and so that story is so impactful and get people bought into that story, right, so know your story.
Speaker 2:I often tell people I do this for our own business. I write it down, I put it down on paper and say this is what we do, this is how we do it. So put down your story. And then the third and I think most important thing is start now. If you think you're going to need the capital in four months, don't start in four months. It's too late. Start before. So get that first call going. Use your resources. We offer 30-minute sessions and you can just get on the phone and talk to someone who's been doing financing for 20 years. Use it. It's free, there's no strings attached. We're not going to ask you for your credit card information first. Just use the resources available for you and get started now so that you can plan and you know what you need.
Speaker 1:That is great and awesome advice and I think so many small businesses need to hear that, need to get a little bit of that challenge, that tough love on the front side so they are ready and prepared when opportunity to work with a large retailer is coming down the road. You need to have done your homework ahead of the need, not on the day that you need it right, Absolutely. Yeah Well, Rohit, thank you so much for sharing your insights about how small to medium businesses can take advantage of the growth opportunities that are available in the digital retail space today and how firms like Bridge are making it easier for them to grow their business, and thank you for joining us today.
Speaker 2:Well, thank you, Scott, and thank you for all the work you do, right? I mean, education is such a huge part of what business owners crave and you're that great channel for providing that education to retailers. And thank you so much for partnering with us and and having us on your show. We appreciate it.
Speaker 1:You bet. Well, if you'd like to learn more about bridge marketplace and all of the lending products and services that they provide to retail entrepreneurs, you can visit their website at the URL up on the screen and make sure that you tell them that you heard about Bridge through the digital front door. And so, for the digital front door, I'm Scott Benedict. Thanks for listening.