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. Finding a capital for your business is one of the hardest things you have to do. There are many financing options you can try to do so. 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.
Venture capital is often misunderstood so many start-up companies do not want to venture in capital companies for failing to invest in risky ventures or new ventures. There is a stereotype that is proliferating that venture capitalists are just like sharks, predators of start-up businesses. But this is not what most people think. 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 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. 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 areas, potential investors are occasionally meeting just to 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. It is also helpful turning to your 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. SBA or Small Business Administration loans are usually applied by local banks which are normally requiring 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. Feel free to view our website for more details about business financing specifically crowdfunding and accredited investor leads.