| Money is not a bad thing. Money creates | | | | Bank Loans - $$ Vary Unsecured loans are harder to |
| opportunities and allows us choices. Somewhere along | | | | get. But even if the approved loan size is reduced, |
| the line in growing your business, you will face one or | | | | this is a good source of capital to explore. |
| more decisions about money. It may be the | | | | Home Equity Loans - $50K+ If you have equity in |
| perpetual need to increase sales, control costs, or | | | | your home that you can cash out, this can be a |
| invest in infrastructure or people. Invariably, you have | | | | source of significant capital, just remember, it's your |
| to make choices about what sources of funding you | | | | own home at risk, which may bias other decisions |
| want to consider. | | | | within the business. |
| I teach solopreneurs and sole proprietors to get | | | | Gov't Funding (SBIR, STTR, Fast Track, etc) - $$ |
| control of their finances by looking at their budget, | | | | Vary There are a myriad of federal programs and |
| cashflow statement and profit & loss | | | | agencies offering capital and guaranteed loans to |
| statement, not just the checkbook, to make | | | | small businesses. Check out which ones you may |
| strategic decisions. | | | | qualify for to fund R&D efforts, before you rule |
| We align the results of those decisions with their | | | | them out. It is amazing how much money they want |
| business plan, marketing plan and sales plan. | | | | to give away even to solo and startup businesses. |
| Even with those planning pieces in place, there are still | | | | Private Investors (Angels) - $25K-$2M These |
| many options to finance the next step for your | | | | individual investors also provide seed money, but |
| business. The fact is every business always needs | | | | they are an elusive breed and hard to find. Angels |
| money and it most likely will take longer to get than | | | | may provide industry or management expertise. |
| you ever imagined. | | | | Angel Groups - $500K-$5M Angels also collaborate |
| Your need for capital and the sources available to | | | | with other angels to invest larger amounts. Getting |
| you depend on the stage of development you are in, | | | | access to them requires an introduction from experts |
| sales volume, size of your team, development needs, | | | | and other service providers. |
| manufacturing or production costs, marketing and | | | | Venture Capital - $5M+ Cold-calling and submitting |
| sales strategies, and many other factors specific to | | | | unsolicited business plans to these people doesn't |
| your market and your offering. | | | | work. They require an introduction from accountants, |
| In general, investors like to see a detailed plan of | | | | bankers, attorneys and other service providers. They |
| how you'll use the money and their ROI. They want | | | | do take a big piece of the company for their |
| some control (usually the larger the investment, the | | | | participation. |
| more control they exert). And they like to see a | | | | Royalty Capital - $50K-$500K This is where you go |
| strong experienced management team, a developed | | | | to market with a near-completed product or service. |
| product/service offering, large market opportunity, | | | | The payback is based on royalties from the revenue |
| and current paying customers (3 or more customers | | | | stream with a cap and your equity is not diluted. |
| start to make you look real). So in fact, it's hardest | | | | Purchase Orders - $$ Vary To increase cashflow, |
| to find other people's money when you are just | | | | purchase orders are ideal. Get contracts written with |
| getting started and gets easier the more profitable | | | | 1/3 down, incremental payments along the way and |
| and growing you become. | | | | the balance at delivery. |
| Les Brown, CEO & President of Brown & | | | | Strategic Alliances - $$ Vary They build support. A |
| Burstein was a serial entrepreneur. At an IEEE Boston | | | | strategic alliance can form in many ways to serve a |
| Entrepreneur Network ( meeting, Les outlined a | | | | variety of purposes for your business. A strategic |
| range of sources to capitalize your business. The | | | | alliance may be someone who donates money, a |
| added value Les provided, is the range of capital | | | | prime customer who partners with you for marketing |
| available from each source. | | | | and sales, a distribution channel who provides |
| Sources of Capital | | | | introductions, lines of credit, etc. |
| Personal Savings - $$ Vary This is an obvious first | | | | Suppliers - $$ Vary Your suppliers will benefit from |
| source for seed capital. Before you ask for other | | | | your future sales. The incentive is for them to |
| people's money, they expect you to believe in | | | | provide trade credit, free samples, maybe design or |
| yourself and the future of your business enough to | | | | testing services or even introductions to fill your sales |
| risk your personal assets. | | | | pipeline and thereby fill their own. |
| Friends&Family - $10K-$250K They too are | | | | IPOs - $50M+ An Initial Public Offering (IPO) gets lots |
| obvious places to start, but you can alienate family | | | | of press because it can provide lots of cash revenue |
| and friends and burn bridges if they feel they are | | | | for emerging companies with a proven ROI. |
| incurring too much risk. | | | | However, most businesses do not or cannot qualify |
| Credit Cards - $10K+ They are a primary source for | | | | for this approach. They are not the best option in a |
| many businesses. But choose wisely based on | | | | down economy. |
| interest rates and other criteria. It is easy for credit | | | | Keep this table handy when you are considering how |
| cards to get out of control, so watch the cashflow | | | | to finance the next steps in your business or how to |
| carefully. | | | | achieve that Powerful 3 Year Vision. |