As part of my series about the “How to Navigate and Succeed in the Modern World of Finance,” I had the pleasure of interviewing Charles D. Carey.
Charles D. Carey is the managing partner and founder of CIG Capital, an alternative investing firm that provides 100% of the funding for a diverse range of industries. He is the CEO of Business Union Financial (BUF) and Financial Consulting Services Group (FCSG) as well as the founder of Live 80/20 Foundation.
Thank you so much for your time! I know that you are a very busy person. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
I have been an entrepreneur and CEO since my early twenties. I have probably run at least 20+ businesses over the years where I was either investing in businesses or creating new businesses during that time. I have worked in many industries, such as management, maintenance, janitorial, marketing, consulting, computers, tech, service, government service marketing ⎯ and the list goes on. As a mainly self-taught entrepreneur, I’ve gained most of my experience by learning as I go and learning from my past failures. I believe it is important to learn from every experience — especially my failures, because I was able to make improvements for next time and become even more successful. This growth and development allowed me to make my first million before I was 30.
As a serial entrepreneur, the number one thing I learned was how to create business models, which, in my opinion, is actually better than knowing the product itself, because if you do not know how to shape the business model or scale as needed then the business will not ever grow. In 2010, I formed Venture 101, a non-profit consulting company for Christian business owners, where I taught different principles to build a business model, processes, and how to scale businesses.
Over the years I also consulted heavily in the finance industry where I was able to work with some really large companies whose business models weren’t as strong as they thought. One multi-billion company in particular had a great finance structure and the product was superb and basically sold itself. But I quickly realized they needed to make adjustments to their company structure and communication in order to remain successful. We explained what they needed to change, but they didn’t and, unfortunately, they failed. After consulting in the finance industry for so long, I learned a great deal about the industries and what it took to become successful. That’s when I realized that I need to do this on my own.
In 2014, I started a small business lending company called Business Union Financial. While we were searching and raising funds for Business Union Financial, we met as a family. We quickly decided to not raise a fund, cease small business lending, and dive right into commercial lending in the large project financing world. That’s when CIG Capital was formed (2017). CIG Capital, LLC, is an alternative investment firm that possesses a unique model of 100% funding for large projects. CIG Capital holds a diverse portfolio in both the global financial market and private equity markets.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?
When I was first starting out I was insecure about my age. As a young successful entrepreneur, I tried to hide the fact that I was the owner of the company. When clients would ask my position, I would tell them I was the general manager because I didn’t think they’d accept that I was the owner or they wouldn’t feel confident in my company. Once clients found out that I was the owner, they didn’t care and as time went on I overcame that fear. I learned that it doesn’t matter what your age is as long as you’re confident in your product and your services.
Is there a particular book that you read, or podcast you listened to that really helped you in your career? Can you explain?
There are two books that I believe have assisted in the success of my career. First, the Bible. I went to BTI Seminary and received a lot of leadership training. When you look at Jesus’ ministry, He multiplied his ministry in three years because of His leadership. He built His people up and gave them the confidence to extend His word. His leadership training has given me a lot of my principles to run a business. One example, Christ would always say to put someone else first before yourself. What does that mean in business? It means investing in the client, investing in the team, thinking about their needs first and then, ultimately, your needs are going to be met.
Additionally, Patrick Lencioni’s The Five Temptations of a CEO. This book taught me how to overcome challenges in business and leadership, and how to recognize the mistakes that leaders can make and how to avoid them.
Are you working on any exciting new projects now? How do you think that will help people?
Yes, right now we are helping the Personal Protection Equipment industry for the COVID-19 pandemic. There is a lack of funding between the manufacturing side and the end buyer so CIG Capital is filling the gap in funding the transactions. We hope this will increase the speed in which PPE items are delivered to those in need.
Thank you for that. Let’s now shift to the central focus of our discussion. Extensive research suggests that “purpose driven businesses” are more successful in many areas. When you started your company what was your vision, your purpose?
The vision for CIG Capital: to create a product that gives projects access to funding when other institutions are saying no. Other financial institutions tend to think “in the box” and are very structured in their lending. Most are not able to get creative and solve problems like we can. We were the first to create some of our unique funding models with Moody’s which has given us the opportunity to solve problems in the financial arena where others have not been able to.
The purpose is to solve problems and help create more economy — create jobs and opportunities, which ultimately spur growth for the community and provide the project owners an opportunity they didn’t have before.
Do you have a “number one principle” that guides you through the ups and downs of running a business?
One principle that helps guide me through the ups and downs of running a business is acknowledging failure. Failure is going to happen — but the bigger question is what are we going to do about it? There’s a saying by John C. Maxwell: “There is no success without failure and losses.” It sounds wild, but people who say they have never failed are not truly successful. Failure builds our character. Failure helps us identify what we need to work on to achieve our best. Entrepreneurs are normally headstrong and when failure happens our pride can get hurt, but humility gives us the ability to grow. Striving to be better is crucial for business owners. Business owners can’t possibly know everything and being humble enough to overcome setbacks will set us up well for the future.
Lead generation is one of the most important aspects of any business. Can you share some of the strategies you use to generate good, qualified leads?
In our world, we are blessed because in finance it is easy to get leads — most people need money! In most businesses, however, a very detailed marketing strategy is important. Some businesses believe in the Field of Dreams model: “If I build it, they will come.” I haven’t seen much success with that model. Instead, I’ve seen the most success in gaining leads with what I call the “sniper strategy,” where instead of being vague in your business plans and strategies, you outline every minute detail, including identifying your target audience, the competitions’ audience, messaging, communication strategy, go-to market strategy, etc. A very detailed plan will ensure you are not missing an opportunity to generate leads and retain growth over time.
Here are my three most important things for generating leads:
- Research the competition. Find out everything you can about your direct and indirect competitors. What are they doing well? What can they improve on?
- Learn about the audience your competition is going after or, on the contrary, look at the audience they are missing — and go after that audience!
- Figure out the best way to connect with the audience. What advertising channels are the best? What messaging will resonate most with the audience to make them take action?
If a fellow CEO would ask you for advice about whether to bootstrap or to look for VC capital, how would you help them weigh the pros and cons of that decision?
In my opinion, the decision to bootstrap or to look for venture capital (VC) should be made based on the business needs and the personality of the owner. Some people have great ideas and are wonderful inventors but don’t want to run a business, in which case I’d say VC is the way to go. If you have a great product, the right type of market, and you can retain a margin or negotiate a royalty, then VCs could be for you. If you have a passion for the product and can handle the stress of running a business and managing others’ money, then raising capital yourself would be for you. Bootstrapping can be stressful, but it can also be really rewarding when you don’t have a lot of debt and you make a lot of money. When trying to decide between VCs and bootstrapping, it’s important to ask yourself, am I too headstrong to allow someone to control my idea, product, or company? Or am I able to bend a little bit working with a VC fund? From there, you should be able to make a decision that is best for you.
What measure do you use to determine the value of a company? What advice would you give to other leaders about how to get an optimal evaluation of their business?
When we evaluate a project, we look at the life cycle of the business (from seed, start-up, mezzanine, growth, equity and exit strategy, etc.). We also look to see if the project is a good fit for our company and model, and we evaluate the project owners and the leadership team to see if they have the experience and knowledge to see the project through to the end.
To get an optimal valuation of a business, you need to look at what you made last year. If your company made $10M, you can’t deceive yourself and say that your company is worth $500M. Usually, your valuation is 7-to-10 times the value of your net. Some companies, such as LinkedIn, don’t like to do that because their assets are so strong that they want to go on the gross. Gross is 1-to-3 times the company earnings.
What would you advise to a founder who initially went through years of successive growth, but has now reached a standstill. From your experience do you have any general advice about how to boost growth and “restart their engines”?
As your company grows you should always plan ahead and be prepared to develop a new business model, be prepared for market changes and external factors such as market maturity, demand, etc. Most businesses heavily prepare for the start-up phase but rarely plan for the next steps of growth and scaling. It’s important to think ahead. If your company has not prepared and has suddenly reached a standstill, you need to read the data. Data is powerful and, hopefully, you have been collecting data since the beginning. If so, then it’s time to start evaluating the information. Ask yourself these questions: Did your audience demographics shift? Was there a shift in consumer interest? Has your product or service fallen behind the times and is it time to revamp? The data should provide an understanding and you should be able to develop a plan to “restart the engines.”
What are the most common finance mistakes you have seen other businesses make? What should one keep in mind to avoid that?
1.) Overestimating future revenue.
When I was first starting out I would overestimate future revenues and spend tomorrow’s sales. I learned quickly to never count my eggs before they hatched. Be sure you are forecasting based on historic sales and be realistic in your estimations.
2.) Only having one source of revenue.
You should always be on the lookout for new ways you can add streams of revenue to your business. It might be an additional service you can offer or leasing your extra office space out. If you diversify your revenue streams you can mitigate future risks.
3.) Pay attention to your cash flow.
According to a U.S. Bank study, 82% of business failures are due to poor cash flow management. Entrepreneurs especially can get caught up in the day-to-day tasks of running a business, because most of the time they are playing the CEO and the CFO. It’s understandably hard to reconcile the books, let alone analyze and manage the cash flow. But it’s important to analyze cash flow and stay ahead of future needs.
Ok, here is the main question of our discussion. Based on your experience and success, what are the five most important things one should know in order to succeed in the modern finance industry? Please share a story or an example for each.
I believe these are the top five things someone should know to succeed in the modern finance industry.
1.) Differentiate.
There are numerous financial institutions that are willing to lend, but it’s important to find a way to differentiate and make it more intriguing to the market. Then of course, it’s all about communication and extending your reach to promote the product. At CIG Capital we did that. We took two common funding models and merged them to create our own unique model. Because of this, we are able to get creative and take more risk than a traditional FI and in the end it makes us more desirable to those looking for funding.
2. Care a little more.
In the finance world, it’s common practice for traditional lenders to only look at the project. They seem to only evaluate the potential project based on two things — the risk and how much they can make.
With traditional lenders, most projects have to fit in a “box” in order for a lender to move forward. If it doesn’t fit perfectly they usually end up denied.
There are so many projects that don’t receive funding from traditional FI because they don’t fit into their “box.” At CIG Capital we care about the project more than just the risk and how much we make on the project. We focus on finding creative solutions to assist in the funding. Because we care a little more and are willing to put in the effort, we have been able to fund some great projects that will help impact our economy over time.
3. Look at finance as a tool vs the ruler.
Treat finance (lender, broker, servicer, etc.) as a tool to help others get loans, solve problems, and help the business grow. Don’t let the money rule the decision process. What I mean by that is, don’t look at each transaction as what am I going to get out of this but rather how can I help others succeed.
4. Efficiency.
Look at the time it takes to do things and see if you can improve. There is so much new technology out there that gives the finance industry an opportunity to lend quicker and make processes smoother.
5. Be adaptable to change.
It’s important to be adaptable to change as an industry and personally. The finance industry has not changed a lot over the years and it’s time to break out of that shell a little. It’s time to get creative and be open to new ideas and models.
Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?
Balance. It is the most important thing to remember. The “Rs” are something I make sure to follow in business and in my personal life. Return on Time (ROT), Return on Enjoyment (ROE) and Return on Investment (ROI). There are seasons for all three and it’s important to balance them out. Some days you’re working from sunup to sundown. Then there are some days where you need to enjoy life, with family, friends, and loved ones. The balance between both is important to ensure you don’t burn out.
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)
We started a foundation called Live 80/20. We are trying to create a different mindset in the nonprofit industry where charities start to have sustainable thinking. In this foundation, we help organizations and people but try to work with them to become as sustainable as possible.
How can our readers follow you online?
https://twitter.com/dancarey101
