Why not consider angel investor funding?
Starting a business can be very tough. The hardest part is usually ensuring you either have enough funding to sustain your way through, or even any funding available at all which you can access in the very beginning. There is always going to be many obstacles in your way, and the first step is to have enough money to get through the initial phases. This is a time when revenue is almost always less than expected or in some cases non-existent.
So what happens if you have a great idea for a business, but you do not have the funds to launch your start-up? Does this mean to give up before you start? No. You can look to angel investor funding to get the company up and running. The key is to know where to find it and how to pitch your concept successfully to capture their attention. In addition you will have to be very thorough, readily available, and be very strong with your follow through.
An angel investor is usually an affluent individual who provides capital for a business start-up, and in return they usually get convertible debt or ownership equity. Some of the angels organize themselves in groups so they can pool their resources occasionally and also they can investigate the possible opportunities together. As you might imagine, being part of the angel group or association allows for very valuable teamwork and knowledge sharing. It is always nice to have support from your peers who have insight and experience in the same arena as yourself.
A lot of angels are small business owners who have made their own way in the business world. Many have established and ongoing concerns and are simply looking at the strong potential for a large return on some of the deals they are proposed. There are a lot of great companies and ideas out there that are only missing proper funding. A lot of the major corporations doing business today would not have ever made it without the start-up capital which they received. In addition, many of these investors help with some of the business plans, strategies, or in some cases even ongoing consulting.
There is a lot of risk involved when an angel gets involved with a company and puts up capital. That is one of the reasons that the return on investment is substantial in many cases. That might seem like an expensive way to fund your business, however, it might be worth it in the long run. You really have to explore all of your options, but not a lot of start-up companies have that many traditional options available to consider. If you are passionate about your concept, be willing to do whatever it takes to make it happen.
Bank loans may be extremely hard and almost impossible to win approval for start-up companies. If there is no track record or any revenue for the banker to review, your likelihood of getting a traditional loan is almost non-existent. You might be able to put up collateral like a home in order to get approval, but this has its own set of problems that are associated with it. Just be sure to always at least evaluate carefully all avenues before making a final decision.
One of the first steps in the process is to calculate what your capital needs are and to have a very professional business plan in place. In most cases, angel investors will consider deals of $100,000 or more. It is just as easy for an angel investor to evaluate a large deal of even one million or more as it is to evaluate $25,000. They would rather see a larger return on the larger amount invested. In addition, be ready to go through a very rigorous screening process because the investor will require plenty of info and due diligence. Another thing is be ready to keep the investor properly informed and updated once the business is running. Your reporting should be flawless, documented, and should include projections.
Angel investors are great for getting businesses up and running. It may seem like a lot to give up in the beginning, but compared with not starting up at all it’s definitely worth it, plus the motivation and mentoring they can provide could ultimately be the difference between success and failure. Microsoft never would have come to fruition without some assistance in the beginning. Do your homework and carefully review any documents or agreements which are proposed.
Best of Funding Success,
Written by Edward E. Cambas – Capital Matchpoint
How to assess, value and structure your start-up company for funding success.
Are you trying to start your own business? If you are you may wish to keep the paycheck that you have while planning your next moves. Of course you want to fire your boss, but there are some things you should consider while you plan and execute your entrepreneurial launch.
After being in business and working in various organizations for over 25 years, I preach the slow go approach to start-up business organizations. I like to think positive and be aggressive don’t get me wrong, I just learned from experience that it pays to pursue your dreams cautiously. My preference is that first-time entrepreneurs consider keeping their salaried jobs as long as possible to preserve personal savings. If your company is properly funded and the concept is very sound that may not apply. Most entrepreneurs have a fantastic idea or concept and little capital if any at all. This is why making all the right moves with regards to getting funding is important before going all in.
All too often entrepreneurs leave their jobs with a dream of becoming successful in their own business and have not properly planned to sustain themselves during the initial phases. A lot of business people crash before getting the chance to begin. I have personally seen a lot of people who have to get part time jobs or who have to take low level earnings to supplement themselves while trying to climb the ladder to success. In many cases these entrepreneurs begin to lose confidence and savings as their dreams and hopes start to fade. This is actually why so many businesses fail early. it is not good to start from a point of weakness rather than strength. Lack of capital is the number one cause of business failure.
The smart way to go about this is to make sure you do all the time consuming research and planning prior to launching the company and prior to leaving your steady paycheck.
Follow these steps to ensure viability and sustainability of your new business:
1. Get organized. Start completing all of your domain registrations, websites, and logos. In addition, have all of your marketing materials in place. Make sure that your business and brand names do not conflict with any trademarks. Start by visiting the U.S. trademark electronic search system (TESS) at www.uspto.gov. All of the searches are free.
2. Get all of your financials in order. The best time to apply for credit is when you don’t need it. Entrepreneurs always get a better deal if they tap their equity or increase credit card spending limits before leaving their salaried positions. Pre-startup is the best time for a person to work on their credit scores. Your personal credit score can dictate what you might pay for equipment leasing, credit processing, and anything that requires a credit check. You can get one free credit report per year to check your report at www.annualcreditreport.com .
3. Set up the company and choose the structure. You need to decide whether you benefit most from sole proprietorship, s-corporation, corporation, or LLC. It might be good to investigate the benefits and pitfalls of each of these choices before making your selection. It might be good to ask an attorney or accountant to define which selection is best for you. It can and will determine the taxes and how they will be assessed. A great place to finalize and register you corporation is www.amerilawyer.com . Prices start at only $99. I can personally say that this is the best service and the least expensive company I know of. My recent total paid was $117 after they add for shipping and that was a corporation.
4. Make sure you experiment before starting. If you are setting up a restaurant you would want to have worked in a similar style business before starting your own. Learn everything you can. It makes the job seem more meaningful when you have to go to work for somebody else, and you know that it is just learning for the future.
5. Health Insurance – make sure that you look into all of the aspects which may affect your health. The Federal law mandates Cobra which would allow you to stay on the company health plan after you leave in some cases. Getting new health insurance is often very costly and this is one of the major considerations in planning ahead. A lot of people who have a illness might be very cautious as to how they decide to leave their current coverage.
There are all types of things to consider before starting your own company. The most important thing is to “plan your work and work your plan.” One of the traits of strong entrepreneurs is their level of persistence. In addition, most entrepreneurs are not easy to knock down. Remember, it is not how you fall down, but how you rebound which makes a person successful.
Written by Edward Cambas – Capital Matchpoint
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