Lulalend CEO and Co-Founder Trevor Gosling is no stranger to the fears and anxieties that come with running a small business in South Africa. In fact Lulalend was borne out of one of the biggest challenges he had experienced in previous entrepreneurial ventures: access to funding. Over time, Trevor has learnt to manage and harness his fears into constructive momentum for his business, and now 5 years into running Lulalend alongside CTO and Co-founder Neil Welman, shares some of his biggest learnings.
What has been your biggest fear in starting your own business?
Initially my biggest fear was largely driven by ego, which I learnt to let go of very soon after starting my first business. My biggest fear was the fear of failure. You feel like you are defined by your business and if it fails it’s a direct indication of who you are as a human being. Having the confidence or self-worth to know that you’re more than your business (even if it is successful) is a big step to getting over this. Also, when you put yourself out there by starting your own business, you feel like you’re in the spotlight where everybody is watching to see if you fail. But barring your mother, no one really cares that much and if things don’t work out. Your life’s not over and you can always get back up. dust yourself off and go again.
Have your fears changed as you’ve grown your business? Are they different from when you first started?
It was important for me in the early days to start letting go of fear and viewing problems as challenges that can be solved. So the biggest thing for me is to identify what exactly I’m ‘fearful’ of and view it as a challenge that there’s a solution to. Once you’ve worked through enough challenges and come out the other side (maybe a little battered and bruised) you realise that with the right mindset and approach it can all be done.
If you could give one piece of assurance to yourself 5 years ago when you started Lulalend, what would it be?
“You’re on the right track!”
Is there such a thing as healthy fear when it comes to running a business?
I wouldn’t call it a fear so to speak, but it’s definitely important to keep a healthy level of consciousness (not quite paranoia) about the competition and where the market is headed. It helps you to perform better and ensures you stay one step ahead. If you start becoming complacent, that’s when you’ll start slipping.
As a business owner what are some of the ways you manage your own fears and anxieties?
My faith plays an important role and helps me put life and challenges into perspective. Accepting that you’re never fully in control and can only do your best is incredibly freeing and helps me sleep at night.
When it comes to your biggest fears; heights, public speaking or even spiders might come to mind. But for an SME owner, there could be quite a few things that keep you up at night. In a poll we recently ran on Twitter you told us that your number one fear when it comes to running a business is not having enough cash flow. But high up there as a top concern for small businesses looking for funding, is the fear of rejection.
They say the only way to really overcome your fears is to face them, and so we chatted to our Chief Risk Officer Garth Rossiter about how SMEs can better understand the funding application assessment process and set themselves up for the best shot at an approval.
What does it mean to be a responsible lender?
To me, responsible lending is simple. It means that our client comes first. It is making sure we all act in our client’s best interests, that we ensure affordability, that we have clear and understandable terms and conditions and ultimately that we support our clients if they experience repayment difficulties. Our business success is driven by our clients succeeding, not failing.
What does a business credit assessment entail?
Well, being a fintech business, our application process is online and our assessment and outcomes are largely data-driven. At the same time we have a phenomenal credit team analyzing outcomes to ensure, first, that our clients get the best offer possible and, second,that the system keeps learning and making better decisions every time. The two main factors we consider are the credit scoring of the business (to assess risk) and then the affordability (which is effectively what we forecast to determine the amount of funding that would be appropriate for any given business). We have a large number of data points which help us to determine the right level of funding and the right score for the business.
What are some of the common reasons for a business not qualifying for funding?
Probably not enough affordability and previous issues with repaying debt (which haven’t been resolved). In both of these cases, we feel it would be irresponsible to provide funding as our assessment suggests that the business would not be able to afford the advance comfortably, or that the business has struggled to meet its obligations in the past.
Why would a business not get approved for the full amount they’ve requested?
Again, we only want to give clients advances where our calculations show this will not negatively impact the business. In some instances, this will be less than the client has requested but, for us, we feel it would damage these businesses if we were to increase debt beyond a certain level. So again, it’s about helping business, not hurting them.
If you aren’t approved, can you re-apply at a later stage?
Of course! Wherever possible, we always want to help small businesses grow. If a business is not approved, we let the owner know the reasons for this which empowers them to make changes and come back in future when circumstances have changed.
What is some advice you would offer businesses who are applying for funding for the first time?
Obviously it’s worth ensuring you meet our minimum criteria (turnover of over R40 000 per month, trading for a year and being able to provide us with 3 months bank statements) but at a business level, I think it’s really important for business owners to understand what their business fundamentally does, their business plan and importantly their working capital cycle so they know when they are likely to need that extra liquidity. Where possible have funding arranged early on to meet these requirements, rather than panic and start missing payments which negatively impacts your credit score and makes access to funding in future more difficult.
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