Forums: Discussions for entrepreneurs and small business.

Sylvia, if you feel that this is a viable undertaking, then by all means, go for it!

While the idea of microfinance isn’t new, taking “repayment” or “financial returns” out of the equation of early-stage funding, certainly is. So, if I got that right, you will be functioning as a matchmaker between micro entrepreneurs and people, who simply need a channel that would enable them to give their money away. Frankly, I think you will be facing some stiff competition on that end J

Just take a look at the fundamentals of your service offering. Going with what you said in an earlier post, I’m assuming that your average donation is about $100 (just for the sake of the argument). So, in order to be able to fund a single financing request of $5,000, you will need 50 donors.

If you have only 100 micro entrepreneurs subscribed to your site with similar requests for donations, which will make you $4,900 in subscription fees, you will need a staggering 5,000 people who are willing to give away $100 each. Do you really think that this is a healthy ratio?

With that being said, I certainly agree with you that it’s time for fundamental changes in the field of small business finance; however, if you’re running a small business and can’t get $5,000 from banks, family, friends, or fools, don’t you think that this says something about the merits of your business and/or qualifications as a small business owner?

Again, I’m not saying that there’s no way you’ll get a few donations from people who empathize with entrepreneurs; I just very much doubt that you will be able to scale this into “a new funding option” for small businesses.

Sorry!

 

Mark

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Jackson Steiner
http://www.JacksonSteiner.com

Advanced Document Design for entrepreneurs, intermediaries, and the financial services industry.
http://www.Publications.FastVentures.com

Mark,

First, 5000 donors is not staggering at all. Not when you consider how many entrepreneurs are out there. We're talking hundreds of thousands. That's just the entrepreneurial pool who are or have been in the situation of looking for funding. They are the ones that get it. They are the ones that understand the situation. Then you have the general public that will also be tapped. This is not to insinuate or assume that all of those hundreds of thousands of entrepreneurs will participate, I'm just saying that target market is vast.

Also keep in mind, that these requestors will have family and friends that will be willing to donate towards their business, but not necessarily be able to fund their entire project. No doubt there are thousands upon thousands in that situation. They will be  much more inclinded to give if they know there will be others contributing to the same business.

As to the $49 posting fee, a business owner knows there is always a cost to obtaining funding. This is certainly a reasonable charge. And please understand that none of the $4900 in your example is profit. There are major costs involved in creating and maintaining the business and the website. This is a professionally created custom website. This is not a template type, fly by night website. The cost to me is enormous. But I am proceeding with this, despite the great monetary risk to me, because I believe this is a necessity.

We entrepreneurs need viable options when it comes to funding. This is an option that can potentially help thousands finally achieve their dreams of owning their own business. As I am fond of saying...it's all in the power of unity. We need to develop and embrace the pay it forward philosophy.

 

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Sylvia Freelance Business Plan Writer

I agree wholeheartedly with Phanio's statement. People shouldn't rely on one resource. It is extremely difficult to be approved for a loan to cover all costs. But if you use varios options your chances are better. Even if requesting funds from Preneuraholics.com you shouldn't expect to receive full funding, especially if you require a larger sum. It should be considered an additional option.

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Sylvia Freelance Business Plan Writer