Alex Shvarts talks with William Gallagher, who has deployed billions in working capital to small businesses, about what separates entrepreneurs who scale from those who burn out.
Welcome to Unbankable, the podcast for entrepreneurs who see no barriers and want a strong, consistent future. I’m Alex Shvarts, founder and CEO of FundKite. My guest is Bill Gallagher, president of CFG Merchant Solutions, a respected competitor and friend whose company has provided about $2.3 billion in working capital to small and medium-sized businesses across all 50 states over 15 years.
On an early mistake he can laugh about now: they got away from managing concentration risk, too many apples in one cart with a single customer, so when that customer stumbled it became their problem. It taught them diversification, expanding the client base, and continually prospecting quality partnerships rather than getting comfortable relying on one paying customer.
On leaving Wall Street to bet on small business: he was terrified, only half-jokingly. He and his partners bet not just on small business but on themselves, worked without a paycheck for a significant period, and grew steadily, ‘how do you eat an elephant? one bite at a time.’ They started as a factoring platform in 2010 after the financial crisis and pivoted around 2014-2015 to the revenue-based funding product they offer today. The deciding factor for leaving a safe Wall Street career was the desire to control their own destiny and build something with social utility and pride of ownership.
We agreed you can’t have success without failure; the AI-billionaire overnight story isn’t most people. Bill noted business is about experimenting, and you learn far more from your shortcomings than your wins. Once you dig into what’s needed to start and grow, the fear gives way to execution, the real key to every successful business.
On a 15-year partnership lasting longer than most marriages: the guiding factor is constant mutual respect and professionalism, even through frustrations and disagreements. Bill and his partner Andy have complementary skill sets and shared goals and ambitions that they communicate regularly. My advice for partners in tough moments: take a breath, agree to disagree, step back, because you’ve made it this far and it’s worth fighting for. We also agreed on boundaries, partners in business don’t have to be partners in life, and keeping that balance is healthy.
On big versus small business failures: most lessons are relatable at any size. Success comes from execution, a customer-first culture, and attention to detail. The companies that climb from $5 million to $25 to $50 to $100 million are the ones that execute, because a lot of little things put together make a big thing, just as a big problem is really a combination of little ones.
On staffing (the ‘S plan’): my mantra is pace your hires and accelerate your fires. Bill’s company has very low turnover, partly because people can feel the culture even when it isn’t written down. His approach is to stay one or two hires ahead of where you need to be, so you’re not scrambling during a growth spurt, and when it’s not a fit, it’s in both parties’ interest to move on. For smaller owners, the key is projecting, even a simple base-case projection tells you whether you’re ahead of or behind plan, which justifies adding a resource (and the expense) before you’re underwater.
On the expense everyone hates: recurring monthly subscriptions, the software you can’t live without but resent paying for. On firing: give regular reviews and clear expectations through a management and middle-management layer; both of us tend to try to rehabilitate people, casting them in a better-fit role, but ultimately you must act in the best interest of the business. Bill finds the hard decision to part ways is often mutual, and comes with a sense of relief.
On the counteroffer ‘shakedown’: I shared my view that when a valued employee comes back leveraging a better outside offer, that’s different from honestly asking for a raise. Asking for a raise you’ve earned is a fair conversation; going behind my back to shop yourself and then playing that against me breaks trust, and no matter how much I need them, I start looking for a replacement. Bill noted it’s difficult calculus, you want to keep high producers, but there’s a limit to what the business can absorb, and a strong management team must be able to fill any void.
On identity as a leader: we both see ourselves as colleagues and team members, not ‘bosses’, I say I work for everyone at FundKite, and I’m really the CEO at night and on weekends when I can plan and prioritize, while during the day I’m wearing 35 hats. Bill added there’s zero shame in people wanting to be compensated for real contributions; the issue is only entitlement that isn’t justified. And to owners: never feel guilty about your success, you took the risk and did the work, but as my dad said, money likes quiet, so stay humble, because success can vanish in a minute.
On growth (the ‘G plan’): it’s the single hardest challenge, because ‘growth’ feels like success, but growth for its own sake isn’t worth it if it comes with shrinking margins and working harder to bring home less. Bill stressed balanced growth, and constantly forcing themselves to think about the company differently at each stage, $5 million a month, then $25 million, then $50 million each require a different mindset. As a leader you must instill a sense of urgency that the organization has a place to go and a plan to get there, with everyone aligned, not running by the seat of your pants.
On funding with zero connections (the ‘F plan’): there’s a lot of low-cost or free financial education online now, so even an owner who’s great at their craft should build basic financial literacy, and be very careful about the partners they choose. Get a trusted financial adviser or accountant, even part-time, and always ask the next question: how much will this capital cost, when and how do I repay it, and what happens if I can’t? Getting money is the easy part, like a credit card; the real questions are about paying it back.
On how much to ask for: it circles back to projections, use of proceeds, and the return on the capital. There’s no reason to pay for capital unless it generates revenue in return. We see plenty of businesses that are excellent at what they do, with great clients and staff, whose books are a mess, and that’s okay, just bring in an affordable expert (part-time CFOs are everywhere) so you understand how capital flows through your business.
On the biggest mistakes seeking funding: being disorganized and unprepared for the conversation, and not being transparent. Organization doesn’t mean sophistication, it means awareness of how capital moves through your business. Bill and I agreed that, just as a too-rosy customer paints a suspicious picture, a perfect answer to every question is a flag, lenders want to know you’re human, with real strengths and weaknesses, so keep it real. I shared the example of a founder launching 15 products who described the windfall in detail but never the plan to make any of them succeed. The biggest misconception is that funding has to be onerous; there are dozens of products, and the right one has to fit your specific need and your current situation, not just where you start.
On winding up in a pit: even when the walls feel like they’re caving in, take a step back, breathe, it’s going to be okay. Identify what’s best about your business to carry forward and let go of what doesn’t work, because small businesses tend to hoard bad decisions. Bill noted a common thread in delinquent accounts is embarrassment, the difficulty of admitting things aren’t going as planned. Whether you owe a credit card or a funding company, just call and say you need help; most problems in life, not just business, can be solved through communication, but ignoring people forces them to act.
On working in this industry: the product has gone mainstream over the last 10-15 years and the landscape is intensely competitive. Financial acumen is only part of it, the business is people, relationships, and doing what you say you’ll do when you say you’ll do it. What excites Bill is the fast-paced, competitive nature, you come in hungry every day. We closed on whether he’d do it all over again: absolutely, calculate your risk, walk before you run, and remember, when banks say no, there’s Unbankable.
President, CFG Merchant Solutions
Chasing ‘catch-up capital’ without financial organization or a plan; lenders and growth both reward discipline.
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