Blog

Home » Financing Your Start-Up

Financing Your Start-Up

Financing Your Start-Up“Show me the money!” — Jerry Maguire

You know why you want to go in to business, what type of company you’ll run and what market you’ll be serving. Another important piece of the puzzle is determining where and how you will get your start-up capital.

You will need to crunch a lot of numbers. In addition to payroll, there’s a lot to consider and budget. Remember, we’ve established you pay your people first, no matter how many are under your employ. Then there’s rent, utilities, supplies, hardware, website and systems maintenance and countless other costly details, depending on what you do.

Let’s explore some methods to get proper financing. This way you can stay afloat in your early days, establish yourself and attract clients.

Your Own Dough

This would be true ownership. If you have your own money, nothing’s stopping you from investing it in your business. The good news is that if you do well, you can pay yourself back as the financier. The bad news is that if the business fails, you have to eat the loss. Some people who cash in on their 401ks or take out second mortgages on their homes to finally start their dream businesses — like bars, restaurants, gyms — and then mismanage them to the point where they’re on a reality show.  The goal is to avoid qualifying for those shows altogether.  If true ownership is the motivation to succeed and make money then you can go for it, just be willing to accept the loss.

The Bank

Securing a loan from a financial institution is the tried and true method for getting your business started. I’ve worked with several businesses that have gone this route and they always know where they stand. Scour the web and even traditional print for the best rates on business loans and consult with us about your needs so we can help negotiate fair rates and terms.

Investors and Venture Capitalists

I advise a lot of venture capitalists and one thing they all have in common — in addition to wanting some ROI — is wanting their money to contribute to something that will have widespread reach.  You don’t need to aspire for world domination. The Starbucks folks started locally, and your products/services/goods could follow a similar pattern. Filling a gap in the market is a great sales pitch for venture capital, so lead with that. Showing the public there was a need for you without them even realizing it is even better.  The new wave of venture capital is in…

Crowdfunding

Publicly raising money via internet investments has permeated business as we knew it.   There are a lot of middlemen you can avoid, you can use social media to reach investors worldwide and can immediately track your progress. The temptation to jump in is understandable — it’s a multibillion-dollar phenomenon.

It’s been on our radar a couple of times this year as well as the Securities and Exchange Commission’s, because as crowdfunding’s popularity grows, the laws evolve and new possibilities arise.

One example is “Mystery Science Theater 3000,” the old B-movie spoof show that will return thanks to:

A demand from a fun and vocal fan base;

creators who want to revive the series;

and Kickstarter.

Through a good social media campaign and the promise of cool/nerdy giveaways, more than 100% of the funds needed to film 13 episodes were raised.

Is this filling a void in your need for entertainment, or will you be adding it to your queue?

Either way, in the not-too-distant future, a man and his two robots will riff on B-movies from outer space and many will watch it while hung over on Sunday mornings.

Depending on your product or service, you can make similar offerings via crowdfunding.

Raising funds in the private or the public capital markets is one of the most complex and daunting challenges that any company faces. While we don’t raise people money, contact Brinen & Associates to discuss the needs of your start-up or if you have a complex operating history.

PRACTICE AREAS

RECENT POSTS

Small Businesses Need Continuity Plans, Too

Given the goings-on since our last post, we need to discuss the importance of disaster preparedness for small businesses. According to FEMA.gov, almost 40 percent of small businesses never reopen following a disaster because just a few inches of water can cause tens of thousands of dollars in damage. I find that unacceptable, especially because it can be prevented in many cases.

read more

Revisiting Roots In Tight Quarters

In our last post we discussed how to manage your business when you’re displaced. That caught us up to the present; Brinen & Associates is still in a temporary work space. We’ve right-sized our office, for now, and it’s forced me to reevaluate things and ask myself a question that all business owners should consider:

read more