Cosmital Using Low-cost SBA Funds to Expand

Sam Kwon is a creative entrepreneur who founded his company to help small and medium sized businesses thrive. Cosmital offers subscription software products to a market historically underserved and overcharged for important technology solutions.

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Kwon came to SmartBiz for a low-cost SBA loan after several unsuccessful attempts to get funding from traditional banks. Read about his entrepreneurial journey and plans for expansion.

SmartBiz: What was your experience before founding Cosmital?

Sam Kwon: I was an engineer at General Electric and credit that company with developing entrepreneurial spirit. GE was a good company where I could have created a great future for myself. But at some point, I realized that I really wanted to build something based on my own dreams, not someone else’s ambitions. There’s nothing wrong with contributing to other’s vision but I was ready to move on. I eventually took on the role of Chief Operating Officer at a boutique management consultant firm where my background in operations analysis evolved.

SB: How did you make the leap to business ownership?

SK: I didn’t start my own business initially, I worked as an independent consultant doing contract work. It was a series of steps, I didn’t immediately jump in. I honestly think being opportunistic instead of comfortable helped me not look back and jump on the chance to start a business.

SB: How did you initially fund your business?

SK: We were fortunate to be self-funded. We built our portfolio with contracts that created revenue. I started with five employees basically using revenue to build additional products and revenue from there. We had all the skills we needed and didn’t need to blow up staffing to develop our product lines.

SB: Tell me how Cosmital helps small and medium-sized businesses.

SK: Our intent is to fill a void - there’s a disconnect between operations and technology. Our beliefs and goals are that higher technology normally associated with larger business should be reachable by smaller businesses. For example, businesses who need a website typically have to hire a freelancer and spend thousands of dollars.

I’ve heard horror stories from our clients. Thirty to forty percent of our clients come to us because of a poor experience or a website that didn’t work. They don’t want to have to go through the pain again. We make it as simple as we can.

I joke that some of the solutions out there require the clients pay for the privilege of doing it themselves – our solution is the best of both worlds. Our platform, expertise and a fully functional website are available for a fifty dollar a month subscription.

SB: How have you marketed Cosmital?

SK: We’ve used networking groups which I describe as word-of-mouth on steroids. We approached this method carefully and the ROI is fairly low. We’re going to use funds from our SBA loan to start an actual marketing campaign. I have an association with a marketing firm and I’ll work on it internally as well. It will be a hybrid process.

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SB: How did you determine that you needed outside funds?

SK: We believed that debt isn’t a bad thing as long as your revenue stream supports payments. Early in 2018 we were filing tax returns and showing a profit. We had enough revenue but needed extra money to shift from survive to thrive without overtaxing resources.

SB: Why an SBA loan?

SK: The pursuit of conventional credit and bank loans pushed me towards an SBA loan. My experience ran the gamut from predatory lenders to stodgy banks. I remember walking into our bank where we’ve demonstrated neutral or positive cash flow for four to five years. They looked at me like they didn’t have time for me and practically told me upfront that a loan wouldn’t happen. One of the better traditional lenders recognized that I had a viable business and referred me to SmartBiz.

SB: How was your experience with SmartBiz Loans?

SK: I can do the required paperwork but to handle it on top of running a business is very challenging. I didn’t know what to expect but SmartBiz guided me throughout the application. My Relationship Manager Kalvin identified problems and helped me navigate around them. There’s a true value there.

SB: How will you use the funds to expand?

SK: I took out a small $100,000 SBA loan. The amount was just what I needed to launch a marketing program and develop new products that will lead to subscriber growth. I’ll continue to offer subscriptions to the markets who need it.

SB: What’s the best and most challenging aspects of running your own business?

SK: The best part is knowing what you built is truly yours. It’s the ultimate satisfaction.

This sounds like a textbook answer but the most challenging aspect is communication on all levels – from internal communication to interaction with vendors and customers. In my experience, poor communication is the reason why eighty to ninety percent of projects fail.

I need to articulate my vision so potential clients understand the true value of working with Cosmital. Another big challenge is being able to process criticism and not take it personally.

SB: Do you have advice for other business owners seeking financing?

SK: I’d probably say that help is out there and doesn’t cost very much. You don’t have to do everything yourself. It’s a matter of asking for help without taking away from resources you do have.

Do you want to read more about Cosmital and how it can help your business? Visit their site to learn more about their mission: We don’t just build sites, we build relationships.

 

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