Lori T. Williams, JD
After consulting with multiple start up businesses the past few years, building their advisory team, and assisting with capital raising, the common theme is that success is a journey.
“Success is to be measured not so much by the position that one has reached in life as by the obstacles which he has overcome while trying to succeed.” – Booker T. Washington.
Not every “great idea” should be funded by an investor. There are steps along the way that each entrepreneur must evaluate before making a case for investor dollars.
When you need a capital infusion into your business, where do you turn?
–Savings;
–Home Equity Loan;
–Line of Credit;
–Credit Cards;
–Traditional Business Loan;
–CEED;
–SBA Loan;
–Alternative Financing;
–Friends/Family;
–Retirement Benefits;
–Angel Investor;
–Venture Capital
The “appropriate” money source varies from person to person or business to business. There is no “one size fits all” funding option.
–Each has pros and cons.
–Timing is important.
–Borrowing terms are important.
–Whether to give up equity and how much is important.
–Your credit score, personal business and financial history matter, and could make or break your funding options.
My advice is to consider all funding options available for the amount of money you are seeking at the moment, and also have a financial strategy for the next phase of your business. Lay out your growth plan for the next 2-5 years. Then you’ll know where to go next, once you’ve achieved your first financial benchmark. We work with several business consultants who assist our clients in formulating business and financial strategies and would happy to make a referral if you need these resources. Contact us for more information.
Today the buzz words are “angel investors” or “venture capital”. Some people are a bit naïve and think some good hearted soul they don’t know is going to fund their business. That may happen, but not without a lot of blood, sweat, tears, and MONEY of your own.
Those who say, “I don’t want to take out a second mortgage or equity line on my home” or, “I can’t touch that money, it is for retirement,” probably aren’t going to get a bank loan or private investment money. While they may want one, they haven’t thought it through. What funding source is going to invest in you, when you are afraid to invest in you? The banks and private investors I’ve worked with have said to me, “if their skin isn’t in the game, why should I put my money in?”
I’m not advising anyone to risk their home, retirement, or life savings. However, if you want someone to invest in your business or loan you money through a bank or alternative financing sources you need a solid business model with a rate of return sufficient to attract investors or which can repay loans, plus generate enough profit to keep you in business. You have to look beyond your cash flow (or lack thereof) at the moment to structure the best deal for you, your business, and your funding partners whether they are a bank or investor.
Startup businesses don’t have the business track record yet, so their personal finances are more closely scrutinized. There are incremental funding options that you can take advantage of before making the commitment to partner with an angel investor or venture capitalist. Contact us to discuss your situation, and determine what type of financing might be best for your business startup or growth plan. We work with attorneys, business consultants, CPA’s, Contract CFO’s, Financial advisors, banks, alternative finance sources, angel investors and venture capitalists, and would be happy to recommend an advisor or funding source for your business, if we feel it is a good ‘fit’.
“What lies before you and what lies behind you are tiny matters compared to what lies within you.” Ralph Waldo Emerson
Best wishes to you on your success journey!
Attorney Lori Williams is the owner of Your Legal Resource. Her focus is to connect clients in need of legal and other professional resources with the right professional for that situation. Utilizing her legal background as well as her network of legal and other professionals she’s built over the past 20 years, Lori helps hand pick the best professional for each of the clients she works with.
When working with Entrepreneurs and Startup businesses, Lori uses her team building skills to help her clients move forward with their business goals and dreams. Whether they need Lawyers, CPA’s, business consultants, bankers, investors or other professionals, Lori can usually recommend someone qualified who will add value to the business and propel it forward towards its next goal.
For more information, contact us at 248-594-4470, or by email at mailto:lori@bestlegalresource.com.