2.0 Raising Capital
FUNDING A BUSINESS >> Each section contains key Action Items located within the downloadable Action Guide >> Click to Download Action Guide.
2.1 Uncover a clear understanding of your capital needs.
Have you written your business plan?
How much money do you need?
Have you conservatively forecasted your financial needs?
What are your financial needs for the next three months?
What are your financial needs for the next six months?
What are your financial needs for the next twelve months?
What are your financial needs for the next twenty-four months?
You need these answers before seeking investment dollars.
Determine your Cash Flow needs.
What type of business do you intend to start?
Does the business require a lot of ongoing capital investment?
Will your sales volume be consistent?
Will your sales volume occur around certain months dedicated to higher seasonal sales?
Do you plan to offer inventory or service on credit, which will then extend your receivables?
Do you confidently understand your daily, weekly, and monthly Cash Flow Needs?
How do you plan to finance your business?
Can you keep working while you start your business?
How much money are you willing to invest in your company?
How much money are you willing to lose by starting your company?
Are you willing to use your own personal savings?
Are you willing to use your retirement money?
Are you willing to borrow against your retirement account?
Are you willing to have partners?
Are you willing to provide equity or ownership in your company in exchange for capital?
Do you know your current Credit Rating or FICO score?
These questions must all be answered to provide clarity for your funding process.
ACTION ITEMS: Complete the Action Items in your Action Guide.
ANSWER the questions above in your Action Guide to gauge your funding needs.
2.2 What Type of Capital is Right for Your Venture?
Most successful businesses utilize multiple sources of financing for their business.
Your ultimate goal is to find capital at the lowest possible cost to you in the shortest amount of time with the least amount of management oversight unless needed or desired.
A thorough and disciplined approach will serve you well as you determine the funding needs for your business and years of growth.
Carefully answering the questions in the previous lesson will help you strategize for the best funding solution that matches your personal and business funding goals.
Your business plan should analyze your development, staffing, marketing and financial projections to help uncover a forecasted amount of capital that you will need for your business to survive before becoming profitable.
Maintain a conservative approach to your funding needs, but keep in mind that most entrepreneurs take two to three times longer than anticipated to get their product, service or company off the ground.
When feasible, provide a financial cushion for your company.
ACTION ITEMS: Complete the Action Items in your Action Guide.
NOW that you have analyzed your own personal financial position and considerations, review the Capital Chart again and continue to think through the options that are most attractive to you. Record your thoughts now.
2.3 Develop a personal plan of action for your fundraising needs.
Nearly every funding source will require paperwork and documentation to secure funding.
Numerous personal funding sources require a high “credit rating” score to obtain capital, so it’s a good idea to request a personal “credit report” that describes your financial history.
On occasion, you may find the report lists negative information that lowers your credit score and you may be able to remove the negative information from your records by contacting the credit reporting agencies individually.
There are three main credit-reporting agencies that you can contact and numerous “free credit report” services–research the best option for your personal preferences. Make sure that the report provides your “credit score” and not just the information that identifies banks and other details about your financial history.
Business Plan and Financial Projections
You’ll definitely want to write your business plan to gain a clear understanding of your business, market, customers, competitors, trends and financial projections that will help to forecast and guide your business.
All equity investors will require a business plan unless the business is already up and running and most financial lending sources will request a business plan as well.
Create one for your business – Click Here for Help.
Investor presentation – Click Here for Help.
Beyond your business plan, you may want to create an investor presentation that outlines the main elements of your business.
The investor presentation should be brief and concise.
A noted entrepreneur and venture capitalist named Guy Kawasaki promotes a 10 / 20 /30 guideline or rule of PowerPoint presentations. Kawasaki says that presentations should have ten slides, last no more than twenty minutes and contain no font smaller than thirty points.
The ten topics that an investor would like to see include:
1) Problem
2) Your Solution
3) Business Model
4) Underlying magic / technology
5) Marketing, sales and distribution
6) Competition
7) Team
8) Projections and milestones
9) Status of timeline and investment opportunity
10) Summary and call to action
Elevator Pitch / Teaser Email
It is very important to have a clear understanding of your business model and market.
Creating a brief and concise description of your business is like writing a mission statement that will be continuously refined until numerous individuals say, “I get it” after hearing a brief description of your business.
By describing a problem and then providing a solution, you can easily create your “elevator pitch” and “teaser e-mail” that briefly describes your business model.
Your goal is to be able to clearly describe your business to someone who has no understanding of your business or market in less than thirty seconds.
Narrowing down your business offering enables you to describe your business in writing and in person to potential investors and numerous others who can be of help to you.
Here is an example, “Did you know that over twenty million Americans want to start their own business, but many of them just don’t know where to begin? Well, the United States Center for Entrepreneurship solves that problem by providing targeted online step-by-step Action Guides on how to start a company.”
Create your own concise description for your business right now.
Include one paragraph as a general overview and a second paragraph that addresses the most important additional supporting points from the “top ten” investor interests listed above.
Private Placement Memorandum
The Private Placement Memorandum (PPM) is a document that completely describes your business in detail for investment purposes.
The PPM can be drafted by an investment services organization or via an attorney and includes all aspects of your business including the financial details necessary for investment considerations.
ACTION ITEMS: Complete the Action Items in your Action Guide.
GO online and get your credit score report now.
Listed below are the three main credit-reporting agencies and there are numerous “free credit report” services–research the best option for your personal preferences.
www.experian.com
www.equifax.com
www.transunion.com
START developing your Business Plan and Financial Projections, if you have not done so already – Review USCFE’s How to Write a Business Plan and Business Plan Presentation Lessons.
DEVELOP your Elevator Pitch / Teaser Email – Review USCFE’s Business Plan Presentation to master your elevator pitch.
Here is an example, “Did you know that over twenty million Americans want to start their own business, but many of them just don’t know where to begin? Well, the United States Center for Entrepreneurship solves that problem by providing targeted online step-by-step Action Guides on how to start a company.”
Include one paragraph as a general overview and a second paragraph that addresses the most important additional supporting points from the “top ten” investor interests listed in the lesson.
CREATE your own concise description for your business now.
2.4 Find investors
WARNING: A clear and concise business plan is NEEDED for all entrepreneurs seeking any form of capital for their business. Numerous entrepreneurs fail each and every year due to poor planning and execution of their business model. If you do not have clarity in the product, service or company that you intend to start or buy and run then please do not seek capital or invest your own capital. Clarity becomes evident when your planning, research, customer surveys, feedback and product or service delivery capabilities positively align to suggest customer demand for your product, service or company.
All investor arrangements should be described and agreed upon in writing by both parties.
Should you choose to accept a business partner, determine the roles, goals and responsibilities in writing before beginning your partnership.
DO NOT PROCEED WITH INVESTORS AND PARTNERS WITHOUT WRITTEN AGREEMENTS.
Who specifically can help you locate funding solutions for your business?
Where to find:
Banks: online
Angels: everywhere
VCs: databases
Service providers
Best way to meet:
Introductions
Entrepreneurs
Other investors
Network – Learn to build your business “contact” network.
In the lessons to come, you’ll develop a large list of potential contacts, however, your primary goal is to be “laser targeted” in your funding search, so that you can save valuable time. Narrow your lists to prospects that appear to have the best potential.
Conduct “information interviews” with accountants, lawyers, successful entrepreneurs and business owners to establish your “contact” network.
Your business network is comprised of individuals, companies, associates, mentors, friends and even family members who can help you raise money for your company.
As you build your network, it’s important to remember that each individual can be connected in some way or another to help you.
In fact, having someone in your network refer you to another person is by far the most valuable method of introduction if they are trusted and respected by your new contact.
Always collect a business card from a new contact or business associate.
Some may say it’s inappropriate to ask for a business card from high-level CEO’s and national leaders, however, sometimes that’s the only chance you’ll have, so go for it!
Always send the prominent individual or leader a handwritten thank you note referencing where you met him or her and what it meant to you.
Purchasing generic thank you cards at a local gift store such as Hallmark or a drug store can work fine. If you prefer to have your personal name, business name or logo, you can have “blank” thank you notes printed with anything on the front of the note card. Again, a handwritten note will set you apart from all others who choose not to take this valuable step.
Write each note with sincerity and always think about how you can provide value to them.
Take the time right now to begin forming your list of networking contacts. Add them to your database, excel spreadsheet, Microsoft Word document or create a section in your journal where you can keep track of your existing and new contacts.
Write down all of the individuals that could possibly help you in your search for funding. Do it now.
Take the time to write down additional names below who may not have been on your list above. Answer each question below by thinking about who each person might know.
Who do you know that could help you with your new business idea?
Who do you know from church?
Who do you know from work?
Who do you know from school?
Who do you know that might be in an organization with you?
Who does your doctor know?
Who does your lawyer or accountant know? (Referrals from trusted advisers are golden)
Who do your best friends know?
Who do your best friend’s parents know?
Who in your neighborhood could help you?
Who does your family know?
Who do your relatives know?
Who works with your parents?
Who do you know from local stores nearby to your home, school or office?
Who do you know at your favorite restaurant?
Who does your haircutter know?
Who do you know in your online LinkedIn.com, Facebook.com, and Myspace.com accounts?
Do you already have a collection of business cards?
This is your network–these are the people that can help you and could put you in touch with other helpful individuals. This is how you build your network…little by little by little.
As you continue to advance your business, your brain will start to think about who can help you in your quest for capital and other assistance.
Action Tip – Give First! As you build your network, one of the most important ways to grow is to provide value to your network.
How can you help them? If you always help others get what they need, they will always help you get what you need.
How do you do this? It’s simple–ask them, “How can I help you?
ACTION ITEMS: Complete the Action Items in your Action Guide.
WRITE down all of the individuals that could possibly help you in your search for funding. Do it now.
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WRITE down additional names for each of the questions in this section.
2.5 Informational Interviews to Seek Capital
Informational interviews are a non-threatening approach to meeting with important people.
Individuals love to help other people and after learning about your interests and goals, they often will refer you to other individuals in their network.
Start by determining whom you want to call.
Look through the list of possible contacts that you generated in the exercise above and specifically target the individuals that are most likely to invest and could be most closely aligned with helping you raise money. Think in terms of “network connectors” or those that can connect you with wealthy individuals within their personal network.
You might meet with a local CEO or business owner, the president of a bank, the president of your local hospital, a wealthy individual in your church, a financial advisor, the manager of a country club or the manager of a high-end auto dealership that has wealthy customers.
You’re looking for ways to reach people with money.
Complete background research before calling anyone, so that you know something about their organization, their interests and hobbies, etc. Track down information via Google searches on the Internet and by calling their office. You’ll be surprised at how much you can learn with just a little time.
Then, buy a pack of basic greeting cards at your local drug store and write a simple note.
“Dear Mr./Mrs. _____, my name is (first/last name) and I live nearby in (your town). I’ve heard your name in the community before and I’ve been very impressed with your background. I’m an aspiring business owner and I want to see if we can meet briefly, so that I can ask you a few questions and get your feedback on my business model? I will call your assistant to see if he or she can find fifteen minutes on your calendar for a brief meeting. My best, _____”
After you send your note card, MAKE SURE to follow up within one (1) to three (3) days after the date that you think the card should have arrived.
When you call, ask directly for the person that will be receiving your note. LISTEN carefully and record the name of his/her assistant and say confidently, “Hi Ms./Mr. __________, is Mr./Mrs. ____ available?”
When the assistant replies, “Is he/she expecting your call?”
You reply, “Yes, in fact, I’m calling to schedule a time to meet briefly with Mr./Ms.___. Is that something that you can do for us right now?”
Depending on their reply, you may have to speak directly with the person that you want to meet.
In either case, honesty is the best policy.
They may ask specifically why you want to meet with them and they may suggest doing it over the phone.
Try this approach to get the meeting:
“Mr./Mrs. ____, I’m starting a new business and I wanted to see if you would give me feedback on my business model. I know that you are a well-connected individual in our community and I thought you might be able to guide me or possibly refer me to someone in your network that could help me.”
“Can we meet briefly for fifteen minutes, so that I can ask you a few questions?”
If they ask, “Help you in what way?” Then say, “Well, I’ve been assembling the company and I’m learning from other seasoned entrepreneurs and leaders on how they built and funded their company. I would love to ask you some of the same questions.
Would that be alright?”
In the meeting:
Get the individual to think back to when they started in their business and needed help from someone. When you ask a question, let them talk. Silence can be golden.
“Mr./Mrs. _____, what was it like when you started your company? Was it easy to get off the ground or was it a struggle?”
How did you come up with your business model?
Did you have advisors or mentors that helped you make tough business decisions?
How did you fund your business when you first started?
If they haven’t asked you to start talking about your company, now is the time to begin addressing the problem in the market that your company intends to solve and begin discussing other features of your business.
SEE BOTH FRIENDS AND FAMILY FUNDRAISING SECTIONS FOR MORE GUIDEANCE
ACTION ITEMS: Complete the Action Items in your Action Guide.
START by determining whom you want to call. Look through the list of possible contacts that you generated in the previous exercise and specifically target the individuals that are most likely to invest and could be most closely aligned with helping you raise money. Think also in terms of “network connectors” or those that can connect you with wealthy individuals within their personal network. List the top five here:
1) Phone #:
2) Phone #:
3) Phone #:
4) Phone #:
5) Phone #:
COMPLETE background research before calling anyone, so that you know something about their organization, their interests and hobbies, etc. What did you learn about each person?
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WRITE a simple note that you can mail to each person.
Example: “Dear Mr./Mrs. _____, my name is (first/last name) and I live nearby in (your town). I’ve heard your name in the community before and I’ve been very impressed with your background. I’m an aspiring business owner and I want to see if we can meet briefly, so that I can ask you a few questions and get your feedback on my business model? I will call your assistant to see if he or she can find fifteen minutes on your calendar for a brief meeting. My best, _____” Write your note here:
MAIL the card and MAKE SURE to follow up within one (1) to three (3) days after the date that you think the card should have arrived.
PREPARE to call and ask directly for the person that will be receiving your note. Write your initial questions here and practice asking your questions before making the real call.
PREPARE to answer specifically why you want to meet with them and how to request an in-person meeting if they suggest doing it over the phone. Write your approach here and practice before making the real call
NOW CALL! Keep detailed notes of each call.
Example:
Call 1 Details
Who: Mr. Bob Smith (President of XYZ)
When: Monday, July ?? at 3:15pm
Details: Set up meeting with Mr. Bob Smith and possibly one of his colleagues (Mrs. Jones) for Friday, August ?? at 4:30pm to discuss my business model. Mr. Smith thought it would be beneficial for me to have Mrs. Jones (CEO of ABC) to attend the meeting. [Set a to do: research Mrs. Jones of ABC before meeting]
TRACK your call details for each call that you make.
WRITE down when you will meet with each person:
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PREPARE for the meetings by practicing the questions you want to ask and what you want to tell the individual about your business. Write a practice script here and practice it before the meeting:
GET to your meetings at least 10 minutes early. Bring a pen, a small note pad, and a firm handshake. Remember – the more you practiced the more confident you should be during the meeting. Be prepared – this is a rare and wonderful opportunity.
MAIL a brief “Thank You” note to each person you met. Mail it out the day after each meeting. Customize it to reflect some aspect of the meeting. For example: “Mr. Smith, Thank you for meeting with me to discuss my business. I truly appreciate the challenges you brought to my attention regarding how I will distribute my products internationally. I have taken your suggestion and contacted Mr. Logan to help me address these challenges. Your time and honest feedback have been invaluable to me in starting my business. Sincerely, ________”
2.6 Bootstrapping
Reduce expenses while working and use leftover cash to start your company. Bootstrapping is by far one of the most common ways that entrepreneurs get their company off the ground. This method requires a creative challenge and solution mindset, perseverance, tenacity and a personal will to survive beyond every imaginable obstacle.
Secrets to “bootstrapping” include generating income and reducing expenses while building your business plan and launching your company. There are numerous different “levels” of bootstrapping from the most basic of changing your daily habits to the most drastic of changing your entire living situation.
What can you personally and legally do to increase your income and decrease your expenses?
David Meadows, founder of Mimeo.com, bootstrapped his first company with both free rent and free office space over fifteen years ago when he was just twenty-four. When Mr. Meadows started his first company in 1993, he was living in NYC where the rent for just a single bedroom in a shared apartment approached $800 per month and a single office in a shared “executive suite” office center rented for $1,000 per month. You might ask, “How could an individual get free rent and a free office?”
One day, Mr. Meadows decided to look in the New York Times for a “work for space” arrangement because he thought he might be able to live with a wealthy family and tutor their children in exchange for living in their home.
Low and behold, the first advertisement that he read said, “Work for space, upper east side, call…” Meadows then called the number and that Saturday morning he visited one of the finest buildings in New York City, 1185 Park Avenue between 93rd and 94th streets on the upper east side of Manhattan.
The exchange? He was required to provide simple “bookkeeping” services for a wealthy family. His job was to record in a “general accounting ledger” all of the family’s house accounts including the local grocery store bills, dry cleaning bills, restaurant receipts, travel and entertainment receipts and other expense items on a day to day basis. He would then write checks for each of the accounts and provide the checks to the family for signing and then Meadows would seal them in envelopes and mail them. The assignment of this task saved precious time for the busy wealthy couple.
Can you imagine this opportunity? Not only did Meadows get to live for free with the family in exchange for these fairly limited responsibilities, but he also established a bond with the family that enabled him to learn from the wealthy couple and meet some of the nation’s most respected leaders and multimillionaires who lived in the same building at 1185 Park Avenue.
Meadows now had free rent, but he also needed a little income while he was writing his company’s business plan and developing the content for his educational product. He then asked the family that he lived with if he could work part-time in one of their companies to make a little extra monthly income.
Sure enough, he worked out a schedule where he would spend the weekdays living in their Southampton home and he managed their retail store during the week. However, Southampton is a “weekend” resort town for wealthy NYC residents and very few customers would come into the store during the week.
This provided six months for Meadows to complete his business plan and content for his product. Now, Meadows was ready to get an office and begin bringing his business to life.
The story gets better.
Meadows was then introduced to another Park Avenue family who was launching an upscale “executive suite” office center in mid-town Manhattan. This shared office environment enabled new office tenants (individuals, startups, regional satellite offices, etc.) to rent office space and have their phones answered as part of their office rental agreement.
The family offered to provide Meadows an office in exchange for answering the front desk phones from 8 a.m. to 9:30 a.m. and from 4:30 p.m. until 6:00 p.m. Now mind you, there were no tenants at this time and that’s why the family was “bootstrapping” too. The executive suite center did not have to pay Meadows and Meadows did not have to pay for an office.
Meadows then had free rent, a free office and a little money saved from the previous six months. His company was now ready for the next stage of development and Meadows began to search for friends and family that would loan him money to start his company.
His goal was simply to raise enough money to help pay for the production and distribution of his product, additional business expenses and marketing costs until the product could become cash flow positive.
He first started thinking of family members, but then turned to friends to successfully raise $15,000 in loans at 10% interest. Believe it or not, he was even given a loan by one of the front door guards at 1185 Park Avenue! Meadows will never forget his friend Mike (the guard) who loaned him $1,000 of “Holiday Tip” money at one of the most critical “cash crunch” stages in the business. Mike was paid back with a very favorable percentage rate.
Meadows used additional funding techniques including credit cards as well as vendor and customer financing.
Meadows used a $3,000 cash advance on his credit card as a deposit on the production of his printed product and convinced the printer (vendor) to allow a 60-day repayment period after product delivery.
Traditionally, bookstores and resellers receive product on consignment and return any unsold portion of the product to the vendor. However, Meadows convinced the Rand McNally Map and Travel Stores (customer) to purchase his product at a higher discount in exchange for not having a product return policy.
Therefore, Meadows paid only $3,000 in advance with the vendor and structured a payment plan with the customer that would provide cash flow in advance of the vendor’s invoice.
Non-traditional financing techniques like this can be created and it’s up to the emerging entrepreneur to imagine, present and secure creative financing opportunities that can be critical to a startup’s cash flow.
The moral of this story is that society wants to help you succeed. Individuals generally have a heart and want to share their success with you, if and only if, you are sincere, trustworthy and willing to communicate and overcome every challenge that stands in your way.
Now, you must determine how you can succeed if you want to bootstrap your company to success!
This challenging journey will be supremely rewarding to the individuals that endure great hardships. You may well be alone in your journey and lose money or earn a fortune, but your journey will live on throughout your entire life’s memories.
If you are willing to be creative and survive beyond every imaginable obstacle, then deeply consider the following questions and write down your most creative answers.
Begin writing down your answers in your Action Guide right now.
How can you increase your income and decrease your expenses?
Can you live at a reduced cost?
Can you live for free?
Can you take on a roommate to reduce your mortgage payments?
Could you live in someone’s house or guesthouse in exchange for work?
Could you move into your parent’s house?
Could your husband or wife support you during your startup?
Can you stay employed at your job while you work on your business plan at night?
Can you reduce the hours in your current job from five days a week to four days for less pay?
Can you find a temporary job that enables you to work on your business during the day?
Can you reduce your expenses and find a weekend job that can pay your bills?
What could you reduce from your daily expenses?
Could you reduce the amount of restaurant meals that you consume?
Could you limit the amount of Starbucks coffee that you consume?
What other daily items could you reduce?
Write a list down now.
What could you reduce from your weekly expenses?
Could you reduce your entertainment expenses?
Could you go out one night per weekend rather than two nights?
Could you reduce your travel expenses?
What other weekly items could you reduce?
Write a list down now.
Could you reduce your monthly expenses?
Could you find another car and reduce your monthly car payments?
Could you reduce your cell phone usage and minutes plan?
Can you discontinue or put a “club” membership on hold?
What other monthly items could you reduce?
Write a list down now.
The best action item for bootstrapping is to “CHANGE YOUR MINDSET.”
Begin to think creatively with an open world of possibilities at all times.
Anything is possible if you set your mind to it.
If you’re going to choose to bootstrap, a thorough approach will serve you well.
Be creative in your approach and always think about how you can increase your income and decrease your expenses on a daily basis. If you can’t find a way to decrease your expenses, then certainly look for a way to increase your income!
Reinforce your confidence through daily motivational books, audiotapes and personal daily affirmations. Bob Proctor is one national speaker that provides excellent audio content and a very uplifting message.
READ Napoleon Hill’s Think and Grow Rich little white paperback book with green letters. Pick up a copy today. While the book may seem to focus solely on building wealth, the fact is that the book will get you to truly focus on your inner desires and help you refine your interests to get your company off the ground.
ACTION ITEMS: Complete the Action Items in your Action Guide.
ANSWER the questions above in your Action Guide to see how you can begin bootstrapping while you start your business. Be creative and you should survive beyond every imaginable obstacle.
2.7 Buying a Business
An existing business offers the buyer a lower risk because there is already an established track record and reputation, an existing customer base, immediate cash flow, and a direction to follow. These are all good features, but are there more variables to keep in mind.
Could there be more risks? Is the value or equity in the business at its peak? Are you seeing the whole story, are there two sets of books? Is the current owner so heavily involved with the customers that the goodwill and loyalty of the customers leave with the previous business owner? It may be hard to determine the real value of the business and you might be paying more than it’s worth. Typically, an existing business will cost you more and sometimes as much as 2x, 3x, 5x, 10x, or more, than the business’ annual revenue.
You’ve also got to ask some questions regarding why the business is for sale. Could the market be tapped and is now heading on a downward trend for revenues? Was the business mismanaged and the owner is looking for a way out? The owner may have personal issues, an illness, tragedy, death or divorce. Having an outside firm survey the business for you can uncover areas of concern and areas of value that might be important for you to consider.
Buying an existing business can be a solid investment and a good decision, however, buyer beware and make sure to perform your thorough due diligence.
Financing Methods
Buying a business can be much like buying a house. In some instances, you’ll work with the actual owner of the business or there may be a seller’s “broker” or a buyer’s “broker.”
In each situation, the entrepreneur purchasing the business MUST be creative and firm when dealing with the purchase of a business.
One of the most common ways to reduce upfront investment costs is to create “owner financing” that enables the purchaser to slowly pay back the cost of the business directly to the owner over a specified period of time.
For a service business selling for $400,000 as an example, the agreement might be structured as $100,000 down from the buyer and $300,000 in seller financing. The seller note could run for five to seven years and have an interest rate of 8% to 10%. Monthly payments are standard and usually start 30 days from the date of sale unless the payment schedule needs to be modified to allow for the seasonality of the business revenues. A seller note would also normally have a longer term if real estate were being financed.
Building confidence with the seller is paramount to establishing a unique payment plan.
In some instances, there may be a percentage of revenue or profit that gets applied to the cost of the business over a specified period of time.
Merging an existing business may also provide unique options such as stock or ownership in the new company and may reduce upfront cash requirements.
Investment capital to purchase an existing profitable business with a good operating history and a favorable outlook can be acquired through commercial banks and other investors.
If the business has been declining in value and a “turn around” is needed, you may be able to locate an investment fund or company that specializes in corporate turn-arounds who might partner with you.
Have you selected a business for sale?
Have you performed your “due diligence” to uncover strengths and weaknesses in the business?
Have you presented an “owner financing” proposal?
Have you met with your local bank representatives to discuss funding options?
Have you searched the Internet for local investment funds and company’s who might partner with you?
ACTION ITEMS: Complete the Action Items in your Action Guide.
ANSWER the questions above in your Action Guide if you are considering buying a business.
2.8 Personal Resources: Savings, Retirement, Investments, etc.
If you have personal resources, then you are one of the lucky entrepreneurs that must clearly define and research your business model and potential before investing your hard earned cash.
You should have developed a thorough business plan and you will want to conduct numerous market and customer surveys to reduce your risks.
Furthermore, you’ll want to meet with a Certified Public Accountant or CPA and a business lawyer to determine the best ways to protect your investments.
The CPA will also help you to document your cash contributions and sweat equity to preserve your ownership interests if you choose to take on additional investors in your business.
Finally, work with your professional investment advisers and CPA to determine your best tax structures and methods that might enable you to borrow against your personal resources.
ACTION ITEMS: Complete the Action Items in your Action Guide.
HAVE your business plan ready and updated with current market and customer surveys to validate your decision to take on the associated risks.
SCHEDULE to meet with your Certified Public Accountant (CPA) and a business lawyer to determine the best ways to protect your investments and your ownership interest if you take on additional investors.
WORK with your professional investment advisers and CPA to determine your best tax structures and methods that might enable you to borrow against your personal resources.
2.9 Most important tips!
Never give up!
Always, always, always record all agreements in writing!!
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