Forums: Discussions for entrepreneurs and small business.

If outside funding can help your company get to revenue stage faster, definitelly use outside funding. Revenue sharing is what I like when it comes to structuring an investment so that you don`t have to worry about fixed loan payments if you are not making money. Try some angel investors or venture capital groups. I`d suggest some investor networking sites like www.GoBig.com  and www.BreadStreet.com .

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Pete Carr
Chatmag.com

You have to bootstrap it especially in the current economic climate. You should measure your promotional activities and find out what each $1 in promotional spend gives you back in return. I think you need to refine what you are doing and extract the highest possible return from your promotional budget. You don`t need external investment for this. 

I believe you also have to look at how big you wish to grow this business and how long you wish to work it. Many entrepreneurs like to build a business and then sell it. They build a three to five year business plan that includes an exit strategy. With a well developed business plan that defines your market and expectations, and a solid business team behind you, you will stand a better chance of attracting investors.
A normal or average business plan will not work here. The plan must be written with investors in mind. Then, you must learn the language of capital. The language that investors wish to hear. They want to know how you will grow their money, their return on investment (ROI). There are several specifics they will be looking for before they will part with their money.

Is the $500K your first round offering? What will you  need later on down the line as you continue to build your business? Do you have a plan as to what you would do if you used you own money and came up short? If you have no other resources the banks won`t touch you. If on the other hand, you properly set your LLC up to do step offerings, your investors want to see you succeed. It is to their benefit to see you grow. If you come up short but they can see your progress they will expect you to come and talk to them. Again, they lose if you fail. Can you see the difference?
The most important thing is how you structure your business so that you don`t give up too much ownership in the early stages. You may need to come back to the investors and you don`t want find yourself giving up controlling shares before you reach success. You, then stand a chance to lose your business. This is where a good business lawyer is worth their weight in gold.

Rob

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Rob Adams
CEO Space Northeast Regional Director
www.ceospace.net
www.ceospace.biz
www.ceospacenortheast.com
302-698-1709

PS: I believe there is a reason so many businesses fail and I believe the greatest majority of those who do fail don`t understand how to structure their business property to attract investors. Bootstrapping $500K is not where most people want to go. Most people who learn how to grow wealth... use other people`s money, not their own. But, then again, this is a very small portion of the American business population that understands this.


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Rob Adams
CEO Space Northeast Regional Director
www.ceospace.net
www.ceospace.biz
www.ceospacenortheast.com
302-698-1709

Only you can make the appropriate decision for your business. However, you may like to review your activities so far, in order to determine what you should do.

Try to bootstrap harder. Look at your costs and eliminate all non essential ones. Refine your marketing spend to only that which gives you a positive return. This does take a lot of testing and measuring but it`s well worth it. Keep improving your conversion rate and your marketing ROI.

Think of it like this, you are trying to create a money generating machine. Unless investors see this, they won`t invest, particularly in the current economic climate.

On the blogs or forums question. Go with both. However, I think forums are better suited to an advertisement based model.

If you wish to launch quickly you will need to dig deep- 500K? Do you have the resources? Remember to maintain control of 100% of what you have you will be going into personal debt.
With investors, it`s there debt. To share the potential wealth to draw in investors you will need to restructure your business to be legally compliant to receive the investments. Keep in mind, it is our experience that it will take you longer and cost you more than you estimate. This is where so many go under bootstrapping the process. You can only go so deep into debt and then you are done. If you retool your business plan and follow an investment schedule you have a much greater base for your financing. BUT, you must do it right. You must go in to it with a no matter what decision. Your level of confidence will attract investors if you set up you business plan and exit plan properly. You must also realize that when you make your presentations that you need to talk the investor`s language and not be focused on your project. They want to know how much money they will make and how soon they will receive it (among other details of how you will get there). This is a process that I would recommend that you get assistance. Otherwise you will be very disappointed that you can not attract investors. It`s tough enough when you do everything right. With investors, you must think BIG.



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Rob Adams
CEO Space Northeast Regional Director
www.ceospace.net
www.ceospace.biz
www.ceospacenortheast.com
302-698-1709

I think it goes back to the expression "Know Thyself".

 

If you are a communicative person, team player, and open to outside feedback - you may want to consider equity shares.  Depending on if your investors are also mentors - they of course want updates as to when and how much they are getting an ROI (return on their investment). There are also Annual Shareholder meeting to contend with. This is perhaps a long term relationship with the option to buy out shares if included in the clause/agreement.

 

Borrow funds if you forsee being up and liquid making money within 30 days. If your business is ready to start ching - chinging then there are even companies that will loan based upon your monthly credit card  sales. Overall, you want to use Business Credit whenever possible. Initially, your personal credit is also reviewed but you want to build Business Credit regardless of what you choose to do.

 

If I had to do it all again, I would have saved more money, built my business credit and alliances (mentors etc) to expedite the journey in a more sophisticated manner. But you know what? You're going to get your best education from just doing it.

Get a mentor (visit SCORE - Small Business Association - and even former College Professors or local VP Entrepreneurs who are uber successful and treat them to lunch 1x a month in exchange for guidance. Who knows - they may also invest in you. )

In the long run, it will be more about the collective intelligence than the initial startup funds. How you use the money (burn rate) regardless of the amount requires wisdom.

 

Good luck!

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