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Smart Start up Strategies in a Recession – Part 2

November 30, 2009 by Frank Goley, Business Consultant

Blog Sponsored By: ABC Business Consulting 

In the previous blog, I tried to explain in simple terms, why a Smart Start Up, or any stage company for that matter, concentrates on three main financial areas:  Cash Flow, Sales & Profitability and Debt Burden.  This is a necessary foundation which needs to be built for these forth coming strategies to have traction.  In that blog, I also referenced some other ABC Articles which properly dissect each area for your follow on exploration.  With that said…….Let’s look at some strategies you can use as a young Company in a challenging economy.

Plan for Revival

The disguised blessing of a Recession is the pressure cooker demand which is waiting to be released Post-Recession.  No matter what the nay-sayers are prognosticating, we are already there in terms of Planning.  Start planning now for economic rebound so you will be hitting all cylinders when stimulus dollars really kick in and demand returns.  When the statisticians say demand is back, it is too late.  You have missed a ton of business and the opportunity to be the market maker.  

Recession Forces Niche Marketing

A Recession forces young companies to be very smart and make targeted decisions which offer the greatest chance for success.  For this reason, Niche Marketing becomes much more pragmatic and has much less risk involved.  This is a blessing!  Niche Marketing is much more profitable on a per unit / per sale basis.  Your chance of success in a Recession increases exponentially if you concentrate on bulleted, narrow scoped marketing.  Spend time narrowing down the most profitable niches, select one or two, market to them, learn, revamp and perfect, then roll it out more aggressively yet still keeping your Marketing Strategy highly targeted.  Getting good at Niche Marketing today will bring survival success in a Recession and growth success in a rebound.

Earn your Own Seed Money

Funding may be tough right now, but you can make it much easier by earning your own seed money.  Put your money where your mouth is before going to funders.  I’m not talking about using your Credit Cards to seed start your Biz.  Some have successfully started this way, but I highly discourage it.  I am talking about equity cash you earn working two to three jobs and living frugally.  Amass cash.  Do not cash in your 401K!

There is nothing more impressive to a funder than a presented growth opportunity, already seeded by the Owner’s earned cash.  You will be amazed how many multi-million dollar companies were started on just a few grand.  These companies grew successful, quickly, because ownership was forced to build it block by block, putting in place a solid business model, which quickly grew when growth capital was supplies.  I have started all my businesses with a $3K – $5K Business Plan, keeping it focused, niche oriented and using technology to be super competitive.  For more on Seed Finance, see my Bootstrapping Biz Finance Blog and the ABC Finance Articles.

Use Open Source Software

Technology is absolutely essential when trying to survive in a Recession with little capital assets – to be ultra competitive – to be small but have large, yet sophisticated, imprint on the market.  Open Source Software is often better than for purchase software and certainly cost effective compared to proprietary products.  In this age, think Online Business Models.  Build your company around an online interface of multifaceted, open sourced software and web ware.  This technology gives you the footprint of a larger company but without the payroll burden, while giving you a platform to perform highly targeted, sophisticated, niche marketing.  Best advice I can give:  build your company around an Online Strategy & Architecture.  And by the way, you do not need to be Tech Savvy to be highly effective with open Source.  Dive in and learn by doing – it’s not that hard in today’s user friendly software and web ware platforms.

Work from Home

Picking up from the Open Source, Online Model, there is no need to have a money sucking office and all the money pit holes involved in having an outside office.  Work from home and use open source collaboration software to communicate with your partners and manage associates.  I think I ran better businesses using the online, home based model.

Use Mentors Effectively

There are a host of volunteer mentoring services and Associations in any community – take advantage of the free entrepreneurial, experienced help.  Go out, go online, network and seek out targeted mentors to help you make smart decisions.  The smartest move any good business person makes is who that person surrounds him or herself with – you are only as smart or good as those around you.  Particularly during a Recession, when business decisions have little room for failure, experienced mentorship and collaboration is absolutely essential.  Take an hour every morning to read forums and blogs to learn what others are to be successful in this economy.

Strategic Alliances

Partner with experience and strength, reduce your risk, and maximize marketing dollars by affiliating and cross promoting.  Find others who have a similar niche and add value to their offering and customer relationships with your solutions.  The biggest trait to look for in a Strategic Ally is Integrity, as well as, one which you should espouse.

The Y Combinator Example

In the June ’09 issue of INC., “The Soul of a New Start-Up Machine” by Max Chaftein, Paul Graham, Start-up Incubator Guru, explains the wave of the future with his Y Combinator “hybrid venture capital and business school that invests in and advises” 40+ start ups a year.  One founder company gets $6K in funding and ratches up to $18K for 3 founder companies.  Y Combinator’s average stake is 6%.  Graham puts the “students” through a fast tracked, real world biz school and urges the entrepreneurs to release products as quickly as possible, often in just a couple – few months.  He keys on young tech stars that opt to starve for Key Knowledge and opportunity to do something special.  How special?  Less than 20% fail and the others find follow on investment, get acquired or rework their direction.  Reddit, a social news website, was acquired by Conde Nast for $10-19 Million.  Loopt, a cell phone software developer, received $13 Million in follow on venture funds.

Ø       Graham Keys:

ü       Take risk out of start up with experienced mentoring.

ü       Spend energies on product development, forget investor relations and PR and produce a finished “version” in 3 months.

ü       Let customers and users help you work out product kinks and relate niche data back.

ü       Live frugally and spend concentrated energies on your business, not going out on sales calls but rather getting cash-flow positive with the develop – test – rework pattern on a short cycle biz model.

ü       Capitalize on cheap band width, open source software and cloud computing to start and grow your company.

ü       Biz today is all about software – use it, develop it, and leverage it.

Well, does any of these Grahamisms sound familiar?  These strategies are important during a Recession start up but really, these are Start-Up Biz 101 Tactics & Strategies for success in any economy.  Start small, work smart, leverage technology, niche market, ally strategically, be customer – centric,  seek mentorship and key on Cash Flow, Profitability and Debt Burden….you are well on the road to being not just Business Successful but Recession Successful.

My next Blog is on Technology to make your Business more successful…..come back soon!

I greatly appreciate your Feedback and Comments!  Let us know how you are doing in this Recession and Strategy / Tactics that are working for you.

Please Refer the ABC Biz Success Blog to your fellow entrepreneurs!  Thanks!

Date:  Nov. 30, 2009

Author:  ABC Business Consulting, Chief Business Consultant

Subject:  Smart Start up Strategies in a Recession – Part 2

Posted in Business Recession Tactics. Comment

Smart Start Up Strategies in a Recession – Part One

November 21, 2009 by Frank Goley, Business Consultant

Blog Sponsored by: ABC Business Consulting 

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Starting up or growing a young company during a Recession is certainly not impossibility, and in many ways it can be advantageous.  Also, whether or not the economy is doing well or not is no excuse for not conducting good business practices.  We could call this Blog, “Good Business Strategies in any Economy”.  The point is, if your company adopts solid Business Strategy, you can certainly weather and even profit in a recession while being positioned to grow exponentially during better economic times.

In this multi-part blog, I will discuss Success Factors and Strategies that will certainly help young or struggling companies, TODAY, in this “seemingly” tough economic environment.  I say “seemingly” because if you figure out how to survive or even profit a bit in this recession, you know you have a solid business model in place.  But isn’t that the case with every start up, young company or turnaround company, whether or not you are in recession?  My point?  Develop sound Business Strategies today, which may be a tough selling and growth environment, will be the mark of your success, not whether you are in an easy or hard selling situation.  Smart business is Smart Business and all boils down to sound Business Strategy which is well Planned, Marketed and Strategically Implemented.

Ok, enough of the soapbox, here’s some strategy you can use today!

Focus on Cash Flows, Sales & Profitability and Debt Burden:

Like I said, this is Business 101 stuff.  The basics.  But I bet many of you reading this Blog have fallen away from this Business Canon.  As I mentioned in the previous Blog on Budgeting & Cash Flows, planning your Budgets and clearly understanding, while realistically projecting, Cash Flows is the most important business management tool there is, when used in combination with a Solid Business Plan that puts a well developed Business Model (and processes and systems) into play with a Strategy.   

Manage Cash Flow and not run out of money.  Sounds easy, right?  Understanding how to use Budgets and Cash Flow Financials as a tool to manage your business on a daily, weekly, monthly and quarterly basis isn’t that tough, especially with today’s Financial Software – anyone can do it, with or without a Financial background and is completely necessary as an Entrepreneurial Tool.  A simple Flow Chart on why Cash Flow Management is so critical:

Product / Service Development => Marketing Plan => Strategic Plan => Company Budget => Sales Forecast =. Cash Flow Forecast =. Profitability => Debt Management

Inversely, the Profitability is managed by 1) Budget Process and 2) Cash Flow Management Process.  The above Flow Chart Process is very simplistic but the thing to remember is the relationship Cash Flow has to the Product / Service Development, Marketing, Budgeting, Sales Forecasting and Strategy before you can register Profitability as a Business.  This is why as a Business Consultant I constantly harp about a solid Business Plan Process which entails the above, plus a lot more.  If you are using Budgeting and Cash Flow Management as a tool, then you are incorporating all the important components of planning and executing solid Business Strategy, which when in a Recession, becomes all the more important.

Resource:  To understand more about Cash Flow, Budgets and Business Financials, please visit:  Cash Flow Management Strategy, ABC Comprehensive Business Planning Guide. 

Sales & Profitability:

Note, I did not say profits.  “Rather, focus on profitability of your product and service lines.  Profitability Analysis forces you to concentrate on the relationship between Sales and Expenses, as well as, Sales and Marketing.  What is the payoff for product “x” sales in terms of Company Expenses to make that happen, as well as, Marketing Expenses to make it happen – and not forgetting, the relationship of ancillary services to product “x”.  If you understand this Profitability relationship, then you understand Cash Flow Management, don’t you?  See where I am going with this?  Cash Flow relates to the Income Statement in a fundamental way.  Good Business Management / Good Business Strategy is a building block, relationship type of process.  A Good Business Plan Process instills this into a business.  Without Good Cash Flow Management, Sales & Profitability become increasingly esoteric and difficult to plan, manage and successfully obtain.

Resource:  Check out the ABC Article on Profit Maximization to more effectively manage your Company’s Profits.

Debt Burden:

Remember, this is a Building Block process, so Debt Burden can be effectively managed through A) Cash Flow & Budget Management and B) Sales & Profitability.  No Cash Flow, then no debt payment.  Not good!  Lack of Sales, and worse yet, lack of Profitability, will prevent securing any future debt.  There are a variety of Profitability financial ratios which are important to compute in relation to your Company Debt.  And guess what, they revolve around the Cash Flow and Income Statements, as well as, the Balance sheet.  I am not going to go into great detail about Financial Ratios, what they mean and how to use them because it is too boring for this blog.  Ok, humor folks!  For a comprehensive explanation of Financial Ratios please refer to the Financial Section of ABC’s Business Plan Guide.  Financial Ratios tell you how effectively you are managing your Cash Flow components and Profit (Income) Components, so that, you can service Debt Burden.  They also indicate how leveraged your Assets are currently.

Cash Flow Management (Budgeting) + Sales & Profitability Management = Effective Debt Burden Management.

For in depth information on Debt Management and Business Finance, please see ABC’s Biz Finance Section.

With this foundation built on Cash Flow, Sales & Profitability, and Debt Burden Management, the next Blog will explore some strategies which can work today toward a Successful Start Up in a Recession…..

We have a detailed Article on Recessionary Business Tactics that I recommend your reading as a follow up and continuation of this blog.  And while we are talking about Sound Business Strategies, you will find a multitude of ABC Business Success Articles in various areas of business that can be quite helpful for your company’s success.  Better yet, request our FREE (For a Limited Time) Business Success Guide for a comprehensive compendium of Business Success Strategies.

Need more help?  Please visit our Services Section for details on ABC’s Value Based, Business Success Packages.

Date:  Nov. 21, 2009

Sponsor Company:  ABC Business Consulting

Author:  ABC Chief Business Consultant

Subject:  Smart Start Up Strategies in a Recession – Part One

Posted in Business Recession Tactics. Comment

The Budget & Cash Flow Relationship: The Strategic Benefits

November 15, 2009 by Frank Goley, Business Consultant

ABC Business Consulting has an in-depth article on Budgeting & Cash Flow, but I think it is important to blog about it for its importance, whether you are a young start-up or business that has been around a while.  Either way, in my experienced opinion, a business owner’s ability to manage Cash Flow is directly proportional to the company’s success.

Understanding how cash is coming in, and when, and then where cash is going, whether within or outside the business, is key toward managing and projecting growth, without running out of cash.  Ok, so that sounds easy doesn’t it?  Don’t run out of cash and the business is ok.  I wish it was that simple.  Not understanding your company’s cash flow on a daily, weekly, monthly, quarterly basis is often the kiss of death.

A Budget forces a business owner to manage his or her Cash Flow, actively.  Budgeting isn’t just about limiting expenses and saving money, but rather a process to help you better see where cash flow is going and better able to manage that cash flow in the future.  A budget identifies where your cash flow has been adversely affected so that you can adjust the strategy behind your Cash Flow Management and Projections.

Budgeting involves Strategy and should be part of your Company’s Strategic Planning.  Strategic Planning implies ACTION, and Budgeting requires action.  A Budget identifies deficiencies and problem areas from a retrospective standpoint, and then the process demands Action to make Strategic changes in order to reverse the identified Problems.  Therefore, to effectively manage and project Cash Flow, having a Strategic based Budgeting Process & System in place is absolutely essential.

Budgets should be done on a monthly and quarterly basis so problems can be identified quickly and addresses before significant harm to Cash Flows occur.  Budgets are great Cash Flow Indicators.  As importantly, Budgets should be used to value the return a company receives based on certain expense levels for “x” expense categories.  In other words, is a Budget’s expense item providing the payoff in Company Cash Flows and also Profits that are expected and/or sufficient?  Again, Budgeting is a Strategic Analysis, not just a cost saving measure in relationship to a Company’s Cash Flow.

Strategically speaking, Budgets are a great management tool.  You make certain assumptions and project a Budget, which directly plays into your Company’s Cash Flow Projection.  As you progress through a quarter, comparing the projected numbers and actual numbers on the Budget, let’s say on a monthly basis, allows you to make different Management decisions, more informed decisions, as well as, head off potentially serious problems before Cash Flow is significantly affected.

A good budget process keeps you on track with investors and lenders.  A company receives funding based upon certain expectations, assumptions and projections.  A Budgeting System keeps transparency, enables a company to better meet investment or lending terms and budget tracking instills confidence from your funders.  Having an effective Budgeting System in place will significantly help you raise funds and attract funding.  Moreover, effective Budgeting will result in more realistic Cash Flow projections, which in turn, are quite important in a company’s ability to attract funding.

Budgets should stress Expenses, not Revenue.  Why?  If you start with Expenses and realistically project and establish firm numbers from the bottom up, verses the top down Revenue approach, you will find that your resulting Revenue analysis and projections start with a realistic picture.  Apply the same bottom up approach to Revenue Projections, and the resulting Company Financial Projections will be much less likely to be overly aggressive or unrealistic.  The result?  Easier Cash Flow Management and the propensity to run out of cash will be minimized considerably.  Effective Cash Flow Management makes Revenue projections so much easier to make, grounded in realism and a company’s track record.

An example of what an effective Budget Process can do was pointed out by Michael Fitzgerald of Inc. Magazine, March ’09 issue, in the strategy section, “One Company’s Budget:  Getting Back into shape:  An IT Department Overhaul.”  Note that the article is in the Strategy section.  CFO, Tom Kelly, when he joined 2nd Wind noticed the company’s tech systems were old.  Instead of incurring the large expense of upgrading the existing infrastructure and software, Mr. Kelly chose to go to WEB based software.  This move reduced the IT Budget to 0.3% of Revenue from .07%.  This saved the company $410,000, but that wasn’t the most significant result as the Tech Upgrades were strategically better for the company by enhancing productivity.  Some examples:

Ø  Email cost doubled but the new email system didn’t require in-house servers, which didn’t require the two dedicated IT employees, replaced by a consulting firm.  The two employees were stuck in the dated capabilities of the old systems and didn’t have the skills to upgrade to a better system.

Ø  Point of Sale Software:  Kelly got rid of an expensive proprietary system and replaced it with a hosted system, Net Suite saving the company 50%, with the added benefit of real-time retail data, data back up and security.

Ø  Hardware:  more efficient, more productive and saving 2^nd Wind $44,000.  Web based software requires less computer power for the company.

Ø  Payroll:  Reduced finance department employees from 12 to 4 by going to a web based ADP Payroll system, which requires less manual data entry.

Get the picture?  Sure Kelly saved 2^nd Wind over 50% on its IT Budget, but what is important is the increased productivity of the new, upgraded, up to date systems replacing the aged infrastructure and software.  The CFO thought strategically, not just financially and used the Budget as a tool to do so.  And in turn, the IT Department’s budget as a percentage of Revenue reduced by over 50%, which means company Cash Flows will certainly benefit, which in turn, means opportunity for increased profitability, a Strategic outcome.

So, remember that Budgets and Cash Flow Analysis and Statements are Strategic tools and should be part of your Company’s Strategic Planning.  Think in terms of strategy, and you will find the great advantages resulting from a good Budgeting and Cash Flow Process.  Make it a part of your company, today!  Take Action, Strategic Action!

Please let us know your Comments to the ABC Biz Success Blog!

Date:  Nov. 15, 2009

Sponsor:  ABC Business Consulting

Author: ABC Chief Business Consultant

Subject:  The Budget & Cash Flow Relationship:  The Strategic Benefits

Posted in Business Financials. Comment

Business Finance in a Recession- Part 4: Business Funding for Veterans

November 9, 2009 by Frank Goley, Business Consultant

Growing or starting a company during a Recession certainly is not impossible.  In fact it can have a lot of advantages, which are discussed in detail in ABC’s Article on Recessionary Business Tactics.  I discussed in the previous three Blogs on Business Finance, finding funding during a down economy is not impossible.  Please review these Blogs for some funding alternatives available to you today.

I am going to switch gears a bit in this blog and write about something near and dear to my heart:  U.S. Service Men and Women.  Having served in the Navy, I know firsthand the level of service and sacrifice service people make on a daily basis.  I also know from 20 years business building and consulting experience that Veterans make fantastic entrepreneurs and business owners.  They have the discipline, the skills and the drive to succeed as a business owner, and most importantly, they clearly understand service, often giving back many fold to their communities.

Unfortunately, as chronicled by Patrick Doyle of Entrepreneur Magazine (July 2009, “…How Veterans can Find Funds”), Veteran business ownership has fallen from 20% of all small businesses 15 years ago to today of only 12%.  We must correct this backslide because Veterans are great Americans and entrepreneurs.  In response, Congress and the SBA have launched some programs to help Veterans start small businesses.

Veteran Small Business Programs:

Patriot Express Pilot Loan:

Summary:

Up to $500,000 Bank Loan; guaranteed up to 85% by the SBA.

Lowest SBA Interest Rates:  2.25 to 4.75 point spread over prime.

Express:  approved within a day.

As of April, SBA guaranteed more than 3,000 loans to Veterans, with an average loan size of $86,000.

Disadvantages:  Need a good credit history. 

Ask the SBA for alternatives.

More Info:  www.sba.gov/vets 

Military Reservists Economic Injury Disaster Loan:

Summary: 

Up to $2 Million Loan to help your business continue and survive when you or an employee are called to active duty.

A great key person protection mechanism.

Disadvantages:

Doesn’t replace the lost skills and experience.

More info:  www.sba.gov/vets 

Veterans Transition Franchise Initiative (Vet Fran):

Summary:

10 to 20% off initial franchising fees from 385 prospective franchise companies.

Advantages:

Franchisors offer proven business plans, business models and marketing strategies, along with great support.Lower your equity investment exposure.

What it isn’t: 

Not a loan but consider pairing it up with a Patriot Loan.

More Info:  www.vetfran.com 

For more information on Franchises and How to Find and Analyze a Franchise opportunity, please see ABC’s Franchise Article.

Veterans are great investment risks and make fantastic entrepreneurs.  Let’s help them succeed.  Provide ABC Business Consulting with a copy of your Military ID or discharge papers, and we will grant Veterans and Active Duty Service People 20% OFF our Services.

Let us hear from you!  We appreciate all your Feedback.

If you are a Vet, thank you for your service!

Posted in Business Finance. Comment

Business Finance in a Recession- Part 3: Business Funding Alternatives

November 2, 2009 by Frank Goley, Business Consultant

Date:  November 1, 2009

Author:  ABC Business Consulting, Chief Business Consultant

Subject:  Business Finance in a Recession- Part 3:  Business Funding Alternatives

In the previous two blogs on Business Finance, I explored two principal means of funding a company during a Recession:  Small, Community Bank Finance and Bootstrapping.  Let’s look at some more real-world, what is working right now finance alternatives for your Business.

Strategic Relationship Finance

Who would ever think to go to Whole Foods Market for business Finance?  Well, Mr. Korson and Rogers did and received a Local Producer Loan (www.wholefoodsmarket.com/values/local-loans-apply.php) , as documented by Sara Wilson of Entrepreneur Magazine (May 2009, “Loans for Local Producers”).  Even though the finance offered is typically for existing companies, the owners of Coracao Confections were able to secure start-up finance.  This seed finance was critical as the entrepreneurs were declined finance by friends, family, banks, community based lenders and angel investors.  A $20,000 seed loan was secured, with projected year-end sales at $200,000.  Not bad! 

What was one of the keys for their success in securing finance through Whole Foods?  Building a relationship of Trust and being Honest and dependable.  In tough finance environments, it mostly boils down to relationships and the strength of the relationships.  Look for and explore industry specific Strategic Relationships which you can parlay into funding.  For more information on Strategic Alliances, Strategic Relationship Finance and Joint Venture Finance, as well as, Vendor and Supplier Funding, among other Finance Strategies and Sources for your Business, please see the ABC Articles on Business Finance. 

The Receivables Exchange 

www.receivableexchange.com

You can sell your Account Receivables online in an Auction Based Environment if you have more than $1.5 million in yearly sales.  Receivables finance and factoring can be expensive, but as bootstrapping, short-term finance instrument, it can be just the ticket.  It is flexible and quick, something growing companies often require. 

Our Business Finance article goes more in-depth about Receivables Finance and Factoring.  Check out Factoring Associations for a long list of Invoice and Receivables funders. 

Reference:  “A Bright Spot in the Credit Crunch”, Inc. Magazine, April 2009. 

Also see:  www.inc.com/keyword/apr09.

On Deck Capital:

Non-bank lender backed by Venture Capital Firms and a Hedge Fund.  Loans are based on a Company’s Cash Flow instead of assets or credit score.  On Deck analyzes the last 6 months of a Company’s Sales history and banking statements.  Makes a loan decision in two days.

Requirements:

Been in Business more than one year.

Bringing in at least $3000 in credit card sales per month, or if don’t accept credit cards, been in business at least two years with an average daily bank balance of at least $3000. 

Loan Details:

Small size:  average of $30,000.

Repay in a year.Interest rates of 18-36%.

Origination Fee of 1-2%.

$25 Processing Fee.

$50 penalty for late payment.

Advantages: 

Expensive rates, yet still less costly than a Merchant Cash Advance, which can charge as much as 100% interest.Automatic daily deductions from a bank account to make loan payments allow businesses to better budget. 

Disadvantages:

High interest rates and costs.

Ties up business capital with the daily payment deductions.Good Fit:This type of loan is a good fit as an alternative to Merchant Credit Card Advances, for short term liquidity and until you qualify for more competitive finance.  Another advantage to this type of business finance is it keeps you focused on the most important Business financial:  Cash Flow! Reference:  Inc. Magazine, May 2009, “Loans You Pay Every Day” by Ryan McCarthy.

Microloans

Micro loans can be a great place to secure seed finance and to find the right Angel Investor.  www.Kiva.org  started out as an international micro lender but now is adding U.S. businesses to its loan recipients.  Kiva raises about $1 million per week, mainly from tiny $25 loans.  Lenders have experienced a 98% payback rate- wow that is impressive!  Now someone, in say India, can lend money to an entrepreneur in the

Average funding time:  56 hours

Loan frequency:  every 31 seconds

What I like about Kiva is the bringing together of small angel investors, with a social media type networking platform.  This form of Micro lending is sure to grow exponentially, as will Micro lending as an Industry.  Take some time to learn more about Micro lending- you may find it a great fit.   

Reference:  Entrepreneur Magazine, July 2009, “Sharing the Micro Wealth” by Jennie Dorris.

Note:  This article has a great step by step breakdown on how Kiva loans work.

Dealing with Investors

Since I have mentioned Angel Investors a couple times in this blog, it would be a good time to provide some advice on securing an Angel.  Below are some tips from Entrepreneur Magazine’s Tom Nawrocki (June 2009, “Dos and Don’ts of Getting an Investor”) when looking for an Investor.  Also, we have extensive information on Business Investment and Angel Investors in ABC’s Finance Articles.   

Do’s:

Build a personal repoire.

Get referrals from Accountants and Attorneys.

Check out an Investor through a business that has received investment from the Angel. 

Have a solid follow on finance/ funding strategy so the Angel’s risk is reduced.

Ask employees to invest.

Don’ts: 

Unrealistic financial projections.

Don’t worry about being small; most Angel Investors fund companies worth less than $1 million.

Fail to show your equity capital invested in your business.

Don’t assume an Investor will be an Advisor.

A choice you will have to make is to secure an Angel Investor that will also serve as an Advisor to your business or just an investment vehicle.  In my opinion, bringing in an Angel Investor who has valuable experience in your business, industry or niche is a must, but understand, this type of Angel will demand more equity.  Also understand that “uninterested” investors can become time consuming to manage, potentially distracting you from the main goal of growing your business. 

Combining Bootstrap Finance with Angel Investment can be a great combination to successfully grow a company.We are interested in hearing from you! 

Your Feedback is welcome!

Posted in Business Finance. Comment