1. Taking your business public. Security laws in the U.S. have made it easier for businesses to go public, and deal stock as a method to raise needed funds, this is still most likely the most dangerous choice. It is typically not a recommended option for very little or really new companies. Since of the number of legal concerns involved, consulting with a well-informed lawyer beforehand is vital. There is also a lot of tension associated with running a public business, and a significant loss of autonomy and control. Before making this choice, be definitely sure that this is the best strategy for your organization.
2. Getting money from relatives. Yes, it can appear like begging, and it’s a challenging thing to have to swallow your pride. Surprisingly, in a recent survey, practically 30% of business owners stated that they raised all or part of the capital they required through family members. If this is your option, make sure that you have your lawyer prepare a routine service agreement. When approaching relative, speak to them about their financial investment the exact same way you would any other outside financier. Inform them about how much cash they can make, not about how much you require their help. And ensure that you keep to your end of the contract.
This is the most common way for entrepreneurs to raise needed service capital. You desire to look at the long-lasting consequences of utilizing your savings, life insurance or credit cards, particularly in the event that your business endeavor fails, or does not bring in the predicted return on investment (ROI). If you do end up financing your task utilizing credit cards, make sure that you go shopping around initially, and discover the card that will provide you the best rate and gives you the most “bang” for your dollar.
4. Venture Capital and Angel Investors. Prior to even trying to find equity capital, look at your business from an outsider’s perspective. Ask yourself these questions: Does your business have a strong track record? (Most venture capitalists do not purchase start up business). Does your business have the potential of becoming huge in the next 5 to 7 years? (People do not purchase your business out of the goodness of their hearts. They’re trying to find a return on their investment– the bigger the better.) Does your Company own a great portion of its market, or does it stand to get a big percentage in the next 12 to 18 months? (Contrary to popular belief, your business does not need to be involved in high tech to bring in equity capital). If you can answer yes to the above questions, your next step is to find a venture capital firm whose goals and ideals are in line with yours. Your next step ought to be to take a look at your “circle of influence” and see if you understand someone who can offer you an individual intro to somebody at the equity capital company. (People purchase people, not just companies.).
5. Remarkably, one of the most common methods (particularly for brand-new business) to raise equity capital, is by inviting your potential or present staff members the chance to end up being investors. Once again, before going this route, talk to your business attorney, and put policies into place that prepare for potential problems. Or a worker quits and goes into competition with you after finding out all of the business tricks?
Here is a attorney that can help with business and related matter:
{
No matter which option you make in looking for equity capital, by planning ahead, doing your homework and following the suggestions of your lawyer, you’ll increase the likelihood of raising the cash you require and making the relationship in between you and your investors a profitable one.
