How to Access Capital for Business

Good Morning,

Entrepreneurship is a hard road, and accessing capital always seems to be a barrier for most. Forbes published an article this week about how to access capital and fundraise effectively. While this article pertains more to business owners, investors who are looking to get into private equity should also take time to read this article.  As always a link to the article is in this blog, but a couple of points I found interesting were:

1. Working capital is crucial to have on hand

2. Online equity crowdfunding platforms are a way to access capital outside of family/friends, the SBA, or a traditional bank loan

3. Having an effective social media presence is crucial (maximizing LinkedIn, Blogging, etc.)

This article did a great job of providing the steps, but from experience, it comes down to doing the research, homework, and coming prepared. A business plan might not always be needed, but at a minimum, a presentation should be available. People want to know how well you understand the business and demographics around it along with having projected revenue and expenses. I have personally seen those that are successful in both the capital raise and execution aspect have a detailed understanding of the client base, why their product fits a need, and what are the hurdles they must overcome. Preparation does not equal success, but it helps to avoid the potholes.

I would be remised if I didn't mention that there is a give and take with offering equity or debt financing. If you are willing to offer equity, the investors will have high demands (audited financials, detailed plan, etc) and as the business, you must have a good understanding of what terms you are willing to offer/take. While the percentage of ownership given up is a huge consideration, the length of the agreement, penalties, and prepayment options are critical. Debt financing is pretty simple and straight forward, but for some equity might be a better route. It was not mentioned in the article but usually there are local private investors in the community that work with small businesses. As with anything it is best to explore all routes to determine which one fits your needs.

For those interested in the start-up community and interacting with other business owners check out: venturecafeglobal.org

Comments

  1. ShaksoupApril 18, 2019 at 8:23 AM

    So proud of you, Floyd and grateful for the information ❤️

    ReplyDelete

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