March 18, 2024

Growing Your Business

Fund It

Venture Capital • Loans • Crowdfunding • Grants

| 4/23/2015

Undercapitalization is among the top reasons many small businesses don’t make it beyond year one. Bottom line, you are going to need startup funds to put your business on firm financial ground, and if you don’t have a ready or large enough pool of cash to draw from, you’ll have to go looking for people and institutions that do. Here are a few suggestions.

Self Financing

Start Close to Home

Before you ask anyone — friends, family, financial institutions — for money, be prepared to tap into your own savings or money market accounts, cash out your stocks, sell your boat, downsize your standard of living and take out a second mortgage.

If none of these seems a viable option, you can always just pull out your credit card(s). While many small businesses have succeeded by charging their way through the first year or two of operation, it’s a risky way to go. If you do take this route, use only cards with favorable interest rates, read all terms and conditions up front, monitor due dates and make every payment on time.

Another option to consider: store credit.

Some retailers make it easy for you to furnish your office with no money down and no interest or payments for a year or more. Make that store’s gimmick work for you, but prepare for the day when the bill comes due; failure to meet the repayment terms almost always results in heavy penalties and interest that is accrued from date of purchase.

 

Venture Capital

Enlist Help from Investors

Equity financing typically comes from an individual — often a family member or friend, even a group of investors — who expects some level of control in the business and/or a percentage of future profits.

Venture capital firms or private individual investors called “angels” are another source. Either may be willing to make money available for your venture if they see potential. Venture capital firms are often controlled by banks, insurance companies and large corporations; angels, on the other hand, are generally wealthy individuals who are looking to support “hot” ideas and untapped investment opportunities. If you decide to pursue this option, be prepared to present a business plan that is heavy on the “wow” factor. These types of investors are willing to take risks, but only if they truly believe in you and/or the product/service you’re promoting.

Keep in mind that less than 1% of proposals for venture capital are ever actually funded. Venture capitalists traditionally deal in large sums of money and they seek better-than-average returns on their investments. Individual angels, on the other hand, will make smaller investments in business startups, and although looking for good returns, they are often less demanding. The Florida Venture Forum website has more info: www.flventure.org.

Tags: Florida Small Business, Growing Your Business

Florida Business News

Ballot Box

Should Congress ban the popular social media app TikTok in the U.S.?

  • Yes
  • No
  • Need more details
  • What is TikTok?
  • Other (Comment below)

See Results

Florida Trend Media Company
490 1st Ave S
St Petersburg, FL 33701
727.821.5800

© Copyright 2024 Trend Magazines Inc. All rights reserved.