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 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. 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. 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.
Aside from venture capital, there are many companies also financing smaller investors through “private placement”. In some areas, potential investors are occasionally meeting just to hear business proposals. In order to find wealthy investors, you have to communicate with business development centers, government agencies, business incubators, and similar organizations that are usually tied up with different communities in your place. It is also helpful turning to your Small Business Development Center (SBDC) that is directly associated with your local community college. Commecial lenders like banks can finance a small business but won’t be able to invest in startup businesses. 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 try considering engaging with accredited investor leads through crowdfunding, a form of encouraging online investors to invest on your business. For more information on how to generate accredited investor leads, feel free to view our website anytime.