Your Ultimate Guide to Starting a Business
It is not easy to start a business because it needs careful study and analysis of the target industry you want to venture with. Finding a capital for your business is one of the hardest things you have to do. But there are financing options you can try to consider to do so. In order to help your business gain the capital it needs, there are different types of investment and lending available such as venture capital, commercial lenders, small business administration, accounts receivable specialist, friends and family funding, and crowdfunding.
There are many start-up companies that do not 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 supposed to be the perception when it comes to venture capitalism. 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 do not take more risk more than what is required or needed just to produce the risk or return ratios that are asked by the sources of their capital. You must bear in mind though that venture capital cannot really afford to invest in new businesses unless there is a good combination of market opportunity, product opportunity, and proven management. Within a span of three years, a venture capital investment should have a reasonable chance of producing a tenfold increase in business value. It must focus on newer markets and products which can reasonably increase sales projection 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. It is best to communicate with business development centers, government agencies, business incubators, and similar organizations that are usually tied up with different communities in your area in order to find these wealthy investors. You can turn to your local Small Business Development Center (SBDC) that is directly associated with your local community college. Banks and other commercial lenders can help you in financing your start up business but would not really be able to invest on it. Small Business Administration loans are applied by local banks that normally 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. For more information on how to generate accredited investor leads, feel free to view our website anytime.