Your Ultimate Guide to Starting a Business
Starting up a business is not an easy task as it involves careful study and analysis of the market you want to venture with. It is really hard to find a funding source for a business. You may consider some financing options to help you achieve the right capital for your dream business. The different types of investment and lending available to help your business gain capital is through 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 are many people thinking that venture capitalist are just like sharks or predators. But this is not really the case. In venture capitalism, venture capitalists are business people who are charged with investing people’s money, with the professional responsibility of reducing risk as much as possible. In order to produce the return or risk ratios that the sources of their capital ask of them, they shouldn’t take more risk than what is necessary. Unless there is a good combination of market opportunity, product opportunity, and proven management, Venture capital cannot really afford to invest in start-up businesses. A venture capital investment must have a reasonable chance of producing a tenfold increase when it comes to a 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, occasional meetings are organized so potential investors can hear business proposals. To find these wealthy investors, it is good communicating with government agencies, business incubators, business development centers and similar organizations that are usually tied up with different communities in your area. 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. Local banks apply Small Business Administration loans or SBA loans, that usually require one-third of the capital supplied by the new business owner. You can also engage in crowdfunding, a form of encouraging online investors to invest in your business, and this can be achieved by considering purchasing accredited investor leads. For more information on how to generate accredited investor leads, feel free to view our website anytime.