Three Reasons Why It’s Better To Secure Actual Funding Than Venture Capitalists

Bootstrapping, or using your own means to help your business succeed, is a road less taken by entrepreneurs. It is a difficult route that promises countless days of no sleep and no guarantees of success. However, if you provide the funding from yourself or with the help of people willing to help you, you get the following advantages.

1.    You Understand Everything

Every part of your business is taken into detail, or else you risk losing your business. You clear up your strategy, find the true vision you want with your business and you implement them upon your whim. You couldn’t understand everything when venture capitalists or other investors try to pounce on your parade.

2.    Growth

As even if your business profits are still wavering during the start, you develop a self-control mechanism to manage your growth. Hiring people based on your profits allow you to remove the risk of over-hiring. Because you are your own boss who funded your own business, you allow yourself the proper timeframe to grow your business. The best part is, you’ll never lose in this route.

3.    You Get All The Equity

Because there’s no investor or venture capitalists dominating the business, you have all the rights to the produce you have with your business. You get all the equity and shares of the business, unless you decide to create an IPO and have public investors help you expand your business.

Fast Business Growth? Maybe You Should Slow Down.

A friend of mine actually made his business work. Just last month, he raised a total of £5000 in profit just on his own. His products were just hand-made with materials that he orders overseas. He gains a 20% profit on each of his products.

I was happy for him because his business was growing fast. Soon, he would need employees and specialised machines to help him do his job. 

Then it dawned on me, I don’t think it was really something good to have your business grow this fast.

He began his business working on the usual model for start-up companies. He had defined and created a steady growth plan for his business. He then endorsed it to a venture capital and intended to grow his business as quick as he could. 

The last step to his plan was to make his business stocks public.

Sure, you could grow your business fast, but that second step, endorsing your business plan to a venture capital, once they agree, you also agree to give almost half of your business to them. They may only care about their benefits for two to three years. This isn’t good especially if you just want money to grow.

As long as my friend could not find founders or investors who are interested in seeing the business grow within 50 years. The sad thing is that with quick growth, comes higher product prices.

How Your Credit History Affects Your Chances of Getting a Business Loan

Your puny credit card may be the answer to your business finance dilemma. Your credit card, along with other business loans, helps increase your credit score if you manage it perfectly. If your business also works with vendors who report to credit institutions, then your scores could increase.

During your non-entrepreneurial years, the use of a credit card under your name, and the management of this credit card, will already create an impact in your credit score. When you get financing for a new car or mortgage for your house, your credit score resets to accommodate your performance with the new financing.

 A start-up company still has no financial background, but lenders and vendors may consider financing the company based on the proprietor’s credit history.

A higher funding from your credit card can help propel your company a long way. As long as you have not missed a payment and you pay the exact amount regularly, lenders will improve your standing and provide financing for the improvement of your business.

However, as it is only personal credit, the loan may be quite limited, but it will grow as your business shows results through its invoices.

Franchising for 2014? Yes or No?

I’ve had some people ask me about the feasibility of franchising for an investment in the upcoming year. This 2013 had played its toll on the European economy. The Euro zone crisis took the most highlight with the property bubble bursting and the currency’s value dropping. Everyone has smaller capital to start with. So is franchising a feasible solution? 

1.    Franchiser’s Health

Many strong fastfood and restaurant chains still remain strong especially in the corporate areas of many countries. However, those that gain greater recognition from consumers are the ones that present something unique, and most of these are small businesses. Now small businesses are likely higher risk investments, but they’re innovative. If you haven’t taken a risk with your investment for quite a while, asking the small business for franchising could open up great opportunities.

2.    Franchise Fees

The only downside to franchising is that you will really have to pay higher franchise fees. Resources, establishment and training fees are rising because of competitiveness and a proprietor will need to scrounge up some high capital. As for returns, refer to number one.

3.    Attractiveness

Still, the kind of company you work with will be the basis of your business’ attractiveness to audiences. Targeting children with kid-themed fastfood could work when you are established in nearby schools or supermalls. However, stay away from standard franchises, such as McDonalds or KFC; they are not as attractive as they once were and more people are leaning to either extreme dishes (giant burgers or fries) or fusion and specialty dishes.

The Best Way to Find Investors For Your Business

Small businesses begin humbly with small backings and for further developments, business proprietors will need investors to help them reach the other length. Finding investors, especially in today’s economic stature, could be difficult, but here are a few ways to help you.

1.    Brokers

Contacting the services of entrepreneurs or people who have successfully raised money through fundraising and preparing business plans can help you greatly. Brokers also have a network of investors looking for new business to put their money in. They could give you good insight about investors. They can also point out which investors could benefit from your business.

2.    Profiling

Your broker could give you an idea about the investors you need, but you need to lay it down on paper. There are different kinds ofinvestors; some choose to be passive and allow you free rein on the business. Others will give you advice and want to have a say in terms of the hiring process, product or project implementation and other details. Each of them could give you an advantage in your business.

3.     Total Capital Needed

Nothing attracts an investor more than knowing how much capital do you need to increase your business. If you say a good enough figure and the returns you could provide to your investors, you have a better chance of gaining more investors. It is highly important that this number is final as investors will not take kindly to figure errors, especially in business.