Your Ultimate Guide to Starting a Business
If you want to venture into a business, it involves a complex process of decision-making with careful study and analysis of the market you want to venture with. One of the hardest things to do is how to find the capital for your business. You may consider some financing options to help you achieve the right capital for your dream business. There are various ways to finance your business to help you achieve the right capital for your business such as venture capital, commercial lenders, small business administration, accounts receivable specialist, friends, and family funding, and crowdfunding.
Many start-up companies don’t want to venture in capital companies for failing to invest in risky ventures or new ventures because venture capital is often misunderstood. There is a stereotype that is proliferating that venture capitalists are just like sharks, predators of start-up businesses. But this is not really the case. Business people who are charged with investing people’s money are called venture capitalists, and they have a professional responsibility of reducing risk as much as possible. Venture capitalists are not taking more risk than what is necessary in order to produce the return or risk ratios that the sources of their capital ask of them. You have to understand though that venture capital cannot afford to invest in start-up businesses unless there is a rare combination of market opportunity, product opportunity, and proven management. A venture capital investment should have a reasonable chance of producing a tenfold increase in business value within a span of three years. Venture capital must focus on newer markets and products in order to increase projection of sales by huge multiples in just a short period of time.
Smaller investors are also financed through “private placement” companies aside from venture capital. In some places, there are groups of potential investors who occasionally meet just to hear proposals. In order to find wealthy investors, you have to communicate with business development centers, government agencies, business incubators, and similar organizations that are usually tied up with different communities in your place. It is also helpful turning to your Small Business Development Center (SBDC) that is directly associated with your local community college. Commercial lenders are good for funding small businesses, but banks are less likely to invest in startup businesses. Local banks apply Small Business Administration loans or SBA loans, that usually require one-third of the capital supplied by the new business owner. Crowdfunding is increasing in popularity as they proliferate online today, and you may consider getting accredited investor leads for your investors. Feel free to view our website for more details about business financing specifically crowdfunding and accredited investor leads.
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