How To Raise Money For Your Startup With Out Really Trying!

O.K. Just Kidding, You'll have to put some work into it!

"Great things are not done by impulse, but by a series of small things brought together." Vincent Van Gogh

When you come up a new business idea and start assembling a team to bring your idea to market, inevitably you're going to have to consider ways to finance it. Depending on how large of a business you want to start and the type of business you want to start will determine the type of financing that you seek.

Many entrepreneurs will start out by bootstrapping the operation using their own money or seeking a Small Business Administration Loan. Others will seek investments from Venture Capital and Angel Investor groups. What do you need to get the loan and what do these Investors look for before they invest with you?

The Small Business Loan Administration will look for :

• A good credit history
• Collateral
• a good team or a potential owner with a good tract record for managing or working in the given field

Venture Capital Groups and Investment Angels will look for rapid growth and a high return on their investment. Venture Capital groups will look for early stage companies and base their investments not on past performance so much as what the future potential is for the company. The Venture Capital Group will invest in the company for shares of the company and expect their return when the Company goes public. Venture Groups will often provide business expertise for the entrepreneur as well if it's needed. The Venture Group is adept at spotting trends and evaluating novel technologies with the potential for rapid and high return. They generally will look for investments in the Biotechnology and the IT fields

Angel Investors are Private Investors who will generally invest any where between $10,000 to $40,000 for a share of the business. They will provide expertise in given areas and like to invest in businesses that are not always but usually with in proximity to where they live.

How do you pitch to the Venture Groups?

Short and sweet!

Your pitch to Venture groups and Investors should be a quick overview of your business plan. Try to get the pitch down to two minutes! I know that sounds difficult but, Venture Capitalists are busy people and have a knack for knowing if something is going to work or not. Be passionate about what you say and make it worth their while. Find a hook to get their attention and then keep it. If your Idea has the potential of making a butt load of money you'll have their attention!

Out the door you want to tell them:

1. What your company does
2. Who your management team is
3. Who your competition is
4. How are you going to penetrate the market?

As always good luck with everything that you choose to do in life. Give it your all and make it happen!

The picture is one of my favorites! It's of Kee'e Beach and The Pali Coast in Hawaii

Should You Invest In a Franchise?

My brother-in-law came to the United States from Damascus, Syria. There, as a young man in his early twenties he was trained and worked as a Chef in the Sheraton Hotel in Damascus . It was his American dream to come to the United States and open a restaurant of his own. After many years of saving, he and my sister had the money to invest. They chose to go with a franchise instead of creating a resturaunt of their own. With a franchise they would be able to have a turnkey business that has been established in the area and receive support and training. Most importantly, with a franchise they would have brand recognition and customers that were familiar with the restaurant. They chose an upscale hamburger franchise in Southern Californa. They met and liked the owners and talked with other franchisees in the franchise network so they would know what to expect. They were able to watch the restaurant being built from raw land and into a brand new establishment with a fabulous kitchen! They have been very successful and happy with their decision.

A franchise will typically offer the prospective franchisee:

• An established business name, trademark, customer recognition


• Business support (business plans, help with location, training)


• Help with financing


• Proven track record


• Product

The downside of opening a franchise over an independent small business:

• Monthly franchise fees of around 6% to 10% of gross sales


• Loss of freedom in product or services


• Reliance on the performance of other franchisees in the system.


• The franchise can terminate your agreement at the end of your contract term.


• You are leasing the trademark name you do not own it.

If you are considering investing in a franchise:

• Evaluate the amount of money you have to invest in the venture.


• Go to Franchise trade shows and talk to the various franchisors and determine what kind of work you would like to do.


• Have the franchisor back up any financial claims with tangible written documentation. The Federal Trade Commision requires all franchisors to provide prospective franchisees with a complete disclosure statement so that the franchisee can make an informed decision.


• Look at franchises that have been in existence for a long period of time--they have a higher rate of success and profitability.


• Talk to other franchisees in the franchise system to find out what you can expect in terms of operation and profit.


• Look at the annual sales and make sure they are increasing and not declining. Do the same with net profit.


• Don't rush into anything. If you feel pressured --walk away.

Check any prospective franchise opportunity for complaints with the Better Business Bureau at

http://welcome.bbb.org/

If you would like any further information to evaluate if a franchise is right for you, The Small Business Administration is an excellent place to start. They have great resources and people trained in helping you to start up a small business including financing options and research materials.

http://www.sba.gov/