photo credit: ronbrinkmann

There are lots of articles and books written about the formula for start-up success, but start-up mistakes are much more consistent. These common mistakes will take even the best idea into start-up dead pool.

Greed

Getting rich quick only happens playing the lottery. If you are starting a company for a quick flip you are guaranteed to fail. If you suck all of the first profits into your personal bank account, you will fail. “Greed is good,” if your goal is failure.

Too Much Money

Flush with cash has put many a venture into complacency and on slow track to failure. Too much money often quenches entrepreneurial hunger, slows reactions, kills a sense of urgency, and can lead to a slow death.

Too Little Money

A lack of money can be just as hazardous. Lots of great ideas have certainly flamed out prematurely without sufficient funding. Given a choice, less is better, but none is certain.

Finding the right funding level is a balance between giving an start-up enough funding to test and adjust, but not enough to draw in laziness.

Believing There is No Competition

The number one lie told by entrepreneurs to venture capitalist. It is never true and believing it will get you beat every time.

When thinking about competition think about who is, who can be, and who will be. Create a plan for each. Put it in your business plan.

Equal Partnerships

The buck has to stop somewhere. Business by consensus will fail. It will slow you, divide you, and end you.

A start-up never has enough resources to lose focus or direction. You need to constantly be focused on the market, not internally. Equally partnerships turn your company into an never ending board meeting.

No (or Weak) Leadership

Start-ups need passionate, benevolent, dictators. If that isn’t you carefully select a partner that is. A young company needs definitive vision, direction, and tenacity to keep everyone locked into the same core success philosophy.

Weak leadership wastes time and money. Both guaranteed recipes for start-up failure.

Creating Products in a Vacuum

Products need customers and users. If you create without them you might as well not start. People buy when they feel valued, involved, and expectations are met. If you are developing only with internal requirement builders and product testers you will fail.

Big Customer Curse

A big customer can be very attractive and efficient for a start-up. However, you will forever be in jeopardy and the weight of that customer’s influence can lead you out of the bigger market.

Perfection

Release early and often. Perfection creates the “vacuum” effect, gives the competition time, and may lead you into a slow death march.

Low Prices

Cutting prices is a gut reaction to slow adoption or sales. Think about signals you are sending your market and the customer–Less Value Here.

If the market will not pay you what your product needs to yield to be profitable then cut it and make a new product.

Trying to Do it All

Focus is a start-up’s friend. Trying to do everything well, as the old saying goes, will lead to nothing being done well. Remember, you only have limited time and money. Focus.

Bill Rice helps companies convert web traffic to buyers. He is a recognized expert, adviser, writer, speaker, and entrepreneur in online lead generation.

Bill Rice is passionate about the social web (social media), online community building, and creating online consumer experiences. Bill Rice regularly applies those passions to design and write money making lead generation projects for his clients. Tell me about your project at It’s About Conversion! or Urgent Leads.

photo credit: HowdeeDoodat

As the economy continues to face credit challenges, small businesses, especially new, start-up companies are finding it even more difficult to find the capital they need to take their ideas and concepts and turn them into viable businesses.

Private equity firms and angel groups are no longer actively seeking new investments. They are more concerned with preserving and protecting their current portfolios. Further, private investors, like your neighbor or local doctors, accounts, lawyers, are not investing in local companies as their investments and retirement portfolios (usually the main source of their investment capital) have taken such large hits that any new investments are just out of the question.

Bootstrapping, by far the greatest source of capital for new businesses, is drying up fast. Credit card issuers and backers are pulling programs, tightening approvals and reducing limits. Friends and families are struggling just to survive themselves and do not have the disposable income to investment in your company.

Taking loans from retirement accounts are nearly impossible today as the market values of these assets have drop so dramatically over the last two quarters. There just isn’t the value there to take a loan against.

SBA backed loans remain just a difficult and costly to obtain as always. These loans still need to be underwritten by traditional lenders who are not making any loans at all as well as be underwritten by the SBA who has followed the banks’ course in tightening standards.

So, what are new, small businesses to do?

A few suggestions are as follows:

First, start smaller and work your way up. Small scale operations mean smaller capital needs. Thus, the small amount of capital a new entrepreneur does have (savings, home equity, retirement plans) can be used to jump start a business if it is designed on a smaller scale.

Micro-Loans: Micro-loans are loans for small organizations or start-up companies that do not qualify for regular loan facilities. These loans usually range from $500 to $25,000 and take up to five weeks for approval and funding.

Personal Loans: There are still a few companies that make personal loans from $10,000 to $100,000 provided the borrower has excellent (and I mean excellent) credit and a demonstrated ability to make the loan payments.

Asset Based Facilities: If your business has some proven track record, even if it is just for a few months, and has generated some financial assets like accounts receivables or credit card receipts, you may qualify for capital against those assets.

Account Receivable Factoring can help speed up your cash flow while you wait for your customers to pay you. You can then access working capital that can be used to generate new business, cover current liabilities obligations, or make payroll. There are companies that will factor receivables as low as $200.

Included with Accounts Receivable Factoring is Purchase Order Financing. If your business has an order to be filled but does not have the money to complete the order (e.g. buy supplies or equipment or hire needed labor) Purchase Order financiers will provide the funds needed based on that order.

Business Cash Advances, while not really a loan, can provide working capital against FUTURE credit card sales. The funds can be use for any purpose and could provide the capital your business needs to get it through these troubled times.

Equipment: Do you own some equipment outright? If so, you can sale that equipment (including tools and machinery) to a leasing company. Then, lease the equipment back from the lessor. You get the cash you need now and still benefit from possible tax deductions of the lease payments and other costs.

Where there is a will, there is always a way. These may not be the cheapest financial products in the market but for most business owners and start-ups, these may be the only option.

When seeking capital in this market, try to keep in mind that it is only temporary. The markets will turn around and lending standard will loosen. So, what you seek now should only suffice enough to get your new, start-up business through this down period.

Joseph Lizio holds a MBA in Finance and is founder and owner of http://www.businessmoneytoday.com. Also, visit his blog at http://businessmoneytoday.blogspot.com/

BusinessMoneyToday.com is a single portal in which business owners can easily find and obtain non-traditional financing for their business. YOU search for the products YOU need and select the lender or financial provider YOU want to work with. Remember, BusinessMoneyToday.com only works with money providers who WANT TO WORK WITH YOU!

photo credit: cwbuecheler

Many start-up companies and even savvy business people are not aware of what it takes to find capital to launch their new idea or propel their business forward. There should be no shame in this because if you were an expert on it you would be in business finance and not the industry you are in. You are good at what you do so taking the time away from that can be detrimental to your business. One mistake 95% of business owners make is trying to learn and perform too much themselves, and not rely on outside help.

To structure a financial deal it takes good business planning and good business planning should involve financial planning and structuring. Unless you have a rich aunt or can self fund your project, you are going to have to sell yourself, your team, your idea, your business, etc to someone. Whether it is the manager at the bank, venture capital fund managers or private angel investors you usually only have one chance to make an impression.

In business financing, only 30-40% of deals are looked at seriously if they have collateral behind them and only 5-10% are taken seriously in the angel and venture capital world. The percentage of actual funding is even lower. These statistics are not to discourage you but to help you understand the importance of getting the right assistance. Raising money can become a full time job and if you are running a business you already have enough work to equal a full and part time job, so why add more to your plate than necessary. If you do there is a good chance that you are actually setting yourself and your business up to fail unnecessarily.

So understanding that raising capital is a full time job if done by you, what is the best way to ensure that you get the job done? The answer is hire it out and just oversee it as you would any other segment of your business that you are not an expert at. Take marketing for an example. Companies such as Coca Cola and Nike do not typically create their own commercials, brochures, logos, etc… , they have agencies that do it. You should take the same approach with financing your business.

When hiring a consultant, hire one that you can present your concept, brainstorm with, and have them do the job for you. Business finance consultants are invaluable to help start-up companies as most start-ups have a concept or idea and are overwhelmed with all the things involved to get the idea to market. To create a successful start- up you have to have a plan and a solid one. It does not mean that the plan is set in stone and you have to follow all the things you say to the letter. Good businesses are flexible and use the plan as a road map, in which they may have to take a different route to make it work better. Consultants help you down the road faster and should be honest of how and when you might need to take a detour to be successful.

An example of this would be raising capital. Different investors want to see the same overall structure in a plan but each one could have a different emphasis. One might think the strength of the team is most important, another might fund on the return on investment time frame, and another could have an entirely different focus. Investors will look at things different than lenders and venture capital will look at things different than angel investors. A good business finance consultant will understand this and will also know what road is the best to take. They will also have different sources they can present your completed plan or prospectus to but allow you to seek out your own as well.

An established business will also benefit from a consultant as although you could be in business for years the market is ever changing especially in todays world and what was true yesterday or a few years ago is sure different today and probably will be tomorrow. A good consultant keeps up on what the reality of today is and plans for tomorrow.

No matter what industry you are in these are just a few reasons not to go it alone. Before you head down the wrong path or need some help making a detour, contact a business finance consultant today. Your business will be better off for it.

Want more information about business finance consulting? Venture Works Capital helps many businesses properly prepare for financing fro start to finish. Visit our website for more information. http://www.VentureWorksCapital.com

photo credit: star5112

“Get an introduction to the venture capitalist.” It’s good advice. It just isn’t always possible, or even likely. Many outstanding entrepreneurs with equally outstanding financing proposals simply don’t have The Introduction.

Unsolicited, and un-introduced, financing proposals are typically tossed into the dog pile or slush fund or circular file. In most venture capital firms it is the job of a new member of the firm, typically someone with a freshly scrubbed MBA, to weed through that pile, toss out unlikely candidates and pick out any projects that are worth looking at. So the first barrier is a young, ambitious, very well educated, inexperienced person who wants to make a good impression on the partners in the firm.

Getting out of the Dog Pile

About 90% to 95% of the proposals in the dog pile are tossed. Some of the top reasons for tossing proposals at this stage include:

Sloppy appearance. Loose pages held together with a paper clip, smudges on the pages, yucky colors – these are all quick “toss me” clues. This is typically the very first thing that the reviewer notices, so the appearance has to be commanding.

Too little information. A 1-2 page summary is very nice IF it has been specifically requested by the venture capital firm and IF it really does include the information requested by that venture capital firm. A generic 2-page summary sent to 200 venture firms is pretty much a waste of time. A 50-page dissertation on a new patent is equally ineffective – it just doesn’t provide all the information that a venture capital firm needs. The length of the proposal is considerably less critical than the quality of the information provided. Rarely can sufficient information be provided in less than 20 pages, and rarely is it acceptable to present more than 30 pages. And all of the pages – no matter how many pages there are — must be responsive to the needs of the specific type of venture capital firm.

Too much information. There’s a myth with some truth to it: When confronted with a huge pile of proposals to read, the reader will toss them up in the air, and the heavy ones that fall to the bottom of the heap will be read last. A financing proposal with three binders attached, with everything from incorporation documentation to copies of patents for competing companies, is too much. Like Scheherrazade’s stories, the financing proposal entices the reader to want more. Dumping everything in the venture capitalist’s lap before ever meeting him gives the venture firm no reason whatsoever to ask for more. In fact, presented with such an overwhelming glump of information, most venture firms would be extremely leery about asking for more.

Wrong format. There is a structure to a financing proposal: the beginning (the cover sheet, the Front Page and the Table of Contents), the middle (the guts of the information divided into logical sections), and the end (absolutely essential attachment, such as copy of critical patent). Omitting sections, or writing in the format of a novel, does little but confuse the issue. Leave the creativity to the presentation itself and keep the structure pretty basic.

Information that is too technical. Scientists and engineers waft poetic about inventions that are all but incomprehensible to everyone else. While it is safe to assume that the venture capitalist is intelligent (and he is!), remember that the first line of defense is someone who isn’t terribly experienced. So explanations really help. Pretty basic explanations help even more.

Lack of a concise Summary Page, with specific funding needed specified. The Front Page, or Summary Page, contains very specific information: the industry, the status of the company, the amount of money needed, the type of funding requested, and The Hook. The Hook is a brief note of whatever it is that distinguishes this company/invention/concept from the thousands of others on the market. Lacking ALL of this information on the Front Page, most venture capitalists won’t go further.

Lack of information on the principals. It is axiomatic that venture capitalists invest in people, not in ideas. There are tens of thousands, if not hundreds of thousands, of patents languishing in the Patent and Trademark Office. There are very few unemployed skilled leaders. Make certain the venture capitalist knows how truly talented your management team is.

Wrong level of investment or wrong industry for venture capital firm. Venture capital firms receive dozens of business plans every day that are simply inappropriate for them. Venture capital firms specialize. Some like small startups; some only invest in mezzanine stage companies. Some prefer investments under $2.5 million; some will only invest over $2.5 million. Some specialize in communications or biotech or energy. Find out what the venture capitalist wants before sending the proposal – you will save yourself a bundle in printing and shipping costs, not to mention the time saved in going after the true targets.

Accentuate the Positive

There are some things you can do that act as a catalyst in getting your proposal noticed (in addition to having a great business plan, which I assume you do have).

First, address the plan to a person, not to the company. In your research, you learned about which partners sat on which boards, which ones gave speeches at which industry event. Use that knowledge now to target the proposal to just the right person.

And, perhaps most importantly, in your cover letter tell why you are sending this business plan to this lender/investor at this point in time. Perhaps it’s because they funded a company that will be a major supplier of yours. Perhaps an associate recommended that firm. Perhaps you heard the principal speak at a convention. The fact that you got his name out of a book doesn’t count. Make the reason real.

Making the Second Cut

Depending on the size and culture of the venture capital firm, the initial reader, a mid level associate or even top partners may make the second cut. Criteria here focus on the specific needs of the venture capital firm, such as:

Emphasize symbiotic relationship with existing portfolio companies. Any company that can demonstrate a strong relationship to a successful existing portfolio company, or provide a means of creating profit in existing portfolio companies, is way ahead of the game. Not only will the venture capital firm be well aware of the industry, but it will welcome the influx of influence on the bottom line of its other companies as well.

Create strong ties where slender threads exist. So an Advisory Board member and the venture capitalist went to the same graduate school. It’s a slender thread of connection. But that graduate school needs to be listed prominently in the bio of that Advisory Board member. (As an aside, contact the department chair or known professors to see if there is a direct introduction available somewhere.) Create a database of all advisory boards, schools, publications, companies and associations that all of your key people, contacts and potential investors have. Cross reference those to everything you can discover about the venture capitalist. There probably are slender threads that can be brought to the forefront.

Demonstrate an in-depth knowledge of the industry and its profit structure. It never ceases to amaze me how many people think they know the retail business without ever having sold so much as a pair of shoes. The same holds true for every industry. Each industry has its quirks and foibles. Each industry has unique profit centers and modes of operation. Each industry has its true leaders and its falsettos, those who talk loud but don’t truly know anything. Nothing can beat actual experience in the industry.

The Final Cut

The top 2-10% of the proposals remain in contention here. About half of the entrepreneurs will be invited to present a dog and pony show. While the early stages of elimination are driven by industry standards, at this level it gets very personal. The selection process here caters to the needs of the specific venture capital firm at that specific point in time, and can change from day to day, or from week to week.

You can do everything absolutely right and be eliminated here. Perhaps the other companies in their portfolio have hit snags that haven’t reached the public yet. Perhaps the venture capital firm is in the midst of over committing to certain industries. Perhaps an IPO that was previously scheduled got pulled back, so the venture capital firm doesn’t have the money it expected to have.

Perhaps there truly is something amiss in your financing proposal that one of the partners picked up on.

The one consolation is that, if you have reached this high, you will likely get a call from someone at the venture capital firm expressing some type of explanation for not proceeding. At the earlier levels of elimination you probably heard nothing at all. Listen carefully to what the venture capitalist has to say, and proceed accordingly. And be encouraged. You ARE in top contention, even if this is not quite the right firm.

Look at your financing proposal again – this time from the perspective a first reader, and then from the perspective of a top partner in a venture capital firm intent on making money. Revise. Target. Send it again.

MaryAnn Shank, a recognized expert in the business plan field, devoted many years to sifting through business plans to find the real gems. She regularly contributes to http://www.businessplanmaster.com with advice to emerging entrepreneurs.

photo credit: JUCCCE

When we purchased Rockford Ball Bearing Corporation out of bankruptcy in 2006, the venture capital market was flush with cash. This spring we sought an additional round of funding for our expansion. Venture Capital is never easy to find, but especially during these difficult economic times it is getting harder. New strategies need to be implemented to find capital.

There are several ways to prepare for VC interviews for funding. Three steps should be implemented out of the gate. These are verifiable and true options:

First, explore your accounting records, tighten up the ship. Cut as many overhead items that are reasonable without gutting your research and development budget.

Next talk with your employees, make sure that their advice is being heard by management. VC firms will start by talking with your employees at all levels. They will rely more on this feedback than your managers may be.

Last, review your business plans, take an objective look. See it through your worst critic’s eyes. What would they change?

The founder of our company Joseph Malik sold Malik Bearing Company to The Harvey Family in 1975. Malik Bearing was renamed Rockford Ball Bearing in 1982 when The Harvey Family had to reorganize the company during the protracted recession of the 1980′s. The due diligence was dinner and a hand shake. Today’s VC firms spend much more investigative time talking with suppliers and customers, reading industry reports and analyzing your firm against industry benchmarks.

The ball bearing industry is a tough business, as tough as the balls we mill. The margins are tight. Venture Capitalists seek the highest and best return for their investment dollars, and it matters not which industry they deploy their currency into. Leverage is a friend to returns of rising businesses but the enemy of gamblers who treat a manufacturing company as a casino. The Harvey Family over leveraged Malik Bearing Company and had to lower debts to get back on a positive stable business path again.

The Venture Capitalists knew this history and we worked hard to offer a better road forward for our business, they agreed and funded us $42 million for our expansion plans.

Michael Malik has run Rockford Ball Bearing Corporation since 2004, he has a MBA from Harvard University and has been a venture capitalist and business development executive in numerous industries.

photo credit: rachie lea

All businesses start with “the big idea”. The person with the idea often times does not have all of the start up capital that they need to turn this multi-million dollar idea into a reality. The first place that many business owners start to seek funding is from friends and family. This first level of funding is sometimes known as “FFF,” or Friends, Family, and Fools. Jokes aside, there is absolutely nothing wrong with this as a place to start.

Funding that you receive from friends and family does have its drawbacks. If the business should fold and you cannot payback these people back you risk losing those relationships. Also, this type of funding is usually limited. Where do you go next?

Many people might say that the next step is to go to the bank. This is a wise choice, but banks are typically going to want to see two years worth of financial statements at a minimum. This is often difficult for a start-up company to provide; hence the phrase “start-up”. Also, if the owner or owners have less than perfect personal credit, it will make this even more difficult.

So what does that business owner now do? There is no substitute for building the separate credit of the business. You can see results within three to four months. You can build upon those results to seek larger sources of funding. The business owners that I assist have seen great results using this process. They have gone on to acquire large credit lines, equipment leases, and vehicle financing. While a business owner is building the credit of that business, they often require an infusion of capital between the initial family and friends investment and the bank investment. That is where an angel investor would come in.

An angel investor is a person who invests in start up businesses. They are taking on a very high risk investment; most new businesses fail within two years. As a result, the investor is looking for an ownership percentage in exchange for the money invested. This is not to say that this investor will always have some ownership interest in the business. Approximately 90% of time, once the loan is paid back, the ownership interest is returned to the owner. While temporarily sacrificing a percentage of ownership may not appeal to some, it may be the road to success.

When a business owner decides to seek an investment from angel investor they must prepare a business plan. The plan presents the potential angel investor with something that outlines several different facets of the business with everything from financial projections to management profiles. A business plan is something that any business will need in order to seek substantial funding. An angel investor will invest anywhere from $25,000 to $3,000,000. As you can see, there is a very wide spectrum. There many factor which will influence the investment amount.

I titled this article by asking whether an angel investor is a savior or a sinner. Ultimately they can be both: They are asking for a stake in your business; however they are offering a way for your business to succeed. The most important thing to remember is that an angel investor can be the solution to the problem of intermediate funding allowing for the dream to become a reality.

Hazen Martin
hazen@fasttrackcredit.com

http://www.fasttrackcredit.com

photo credit: Jazz Defo

Many would-be entrepreneurs who are long on vision but short on capital think that “angel” investors are the way to go for start-up capital, and they very well may be. Before approaching them, here are 10.5 things you should know:

* 1) Angel investors generally participate in the early stages of a company’s growth; they will plan an exit strategy to recoup the capital they have invested within 3-5 years. At that point they expect their companies to have enough of a track record to be able to attract capital from sources that can invest a greater amount but are more risk-averse; for example, though a sale of the company. This may be through a public offering of shares (an Initial Public Offering, or IPO). Angel investors will typically sell their shares in your company at that point.
* 2) They want to make money and will cull over many proposals to find companies that they feel will be successful. Even so, they are realistic enough to know that not all of their angel investments will succeed. The success rate is typically around 30-50%. Therefore, they try to balance long shot investments with those that are more likely to succeed.
* 3) Unlike venture capitalists, they are often motivated not only by the prospect of making money but also by the desire to be involved in the operations of their companies as advisors or mentors. Often angel investors are people with management expertise themselves; they may want to nurture the growth of their companies by participating in such management activities as strategic planning or marketing.
* 4) They will want to know a lot of things about you and your proposed venture, foremost among them whether you have put your own money into it: have you, or are you willing to, take out a second mortgage on your house to fund it? Have your friends and family invested in it? In the language of angel investors, this is known as “having skin in the game.” If you can’t answer yes to these questions, they will probably conclude that you don’t have enough confidence that your idea will succeed in the marketplace to put yourself on the line. Why, then, should they have enough confidence to invest in your venture?
* 5) To a certain extent, they will expect you to understand the limits of their knowledge: what they know and don’t know, and to present your proposal accordingly. One of the things they will probably not know is the extent to which your idea is unique and protectable – particularly if it involves intellectual property, as many new companies do today. Speak to these issues without prompting.
* 6) They look for certain personal characteristics. Have you shown that you have integrity? Do you communicate clearly? Listening, which is perhaps better called “hearing,” is both a necessary and rare skill. And express yourself in a lucid fashion; this includes speaking English to them rather than the language or jargon of your field or its technical details.
* 7) Demonstrate both flexibility and agility. You may have the world’s best idea and the world’s best business plan – today. Conditions change rapidly, and you may have to be quite nimble in order to keep up with tomorrow’s market.
* Know that everything is negotiable, and be prepared to negotiate with them and everyone else. The skills noted above are key to win-win negotiation. Aim to create win-win situations.
* 9) In the end, as with most other decisions, gut feel is often the determining factor in angel investors’ decisions. In the end, their decisions are based on emotion, as most decisions are. But they need facts to justify their instincts.
* 10) They tend to run in packs – not herds, but packs. That is, individual angel investors may form groups interested in businesses in the same general area such as technology or biotechnology or in the amount of risk that they are prepared to assume. It is perfectly acceptable for you to ask, if you are turned down by one or a group of investors, if they know anyone else who might be interested. They often know each other and will happily recommend other people for you to contact – provided that they feel good about you and your idea.

10.5 They will not descend from the heavens on gossamer wings carrying bags of money. If by some chance they do, they’re not just simply going to hand those bags over to you.

In short, there is nothing supernatural about angel investors. If your first attempts don’t pan out, persevere; if your strategy is good, change your tactics. Keep on keeping on. Above all, stay out of your own way. The tips above should help you to do that. Eventually you will either find an investor or decide to give up. But don’t give up too fast.

Jeanette T. Wallace, Ph.D.
jeanette@leadership-works.com

http://www.leadership-works.com

314.772.7727

Jeanette Wallace, Ph.D., the president of Leadership Works LLC, is an organizational psychologist based in St. Louis, Missouri. Briefly stated, her firm’s mission is to help people and organizations get out of their own way as they move towards achieving goals. She has both individual and/or corporate coaching practices, all aimed at getting improved results both personally and organizationally.

She takes a process approach in her work and appreciates the strengths that clients can leverage in turning potential into performance and helps clients recognize and use them. She offers processes specifically focused on leadership, strategic planning, customer loyalty and both individual and organizational assessments.

Jeanette is an expert facilitator. She has practiced organization development for 25 years as both an internal and an external consultant to executives and managers of companies in a variety of industries. Clients in transition find her services particularly valuable.

photo credit: sunciti_sundaram

Question:

I’m an entrepreneur and have finished my business plan. I’m getting ready to raise $2 million for my startup real estate company – but a friend of mine said I should only talk to accredited investors. I’m not exactly sure what an accredited investor is and I don’t understand why I can’t talk to anybody I want to about investing in my company?

Answer:

The term, accredited investors, has to do with securities laws – both federal and state – and making sure you comply with the very onerous restrictions that go with the fundraising for your start up company. I’ll give you both the short and long answer to what an accredited investor is in a minute. But the first thing you need to know is that if you raising capital from angel (AKA private) investors, you will almost certainly need more than just a business plan. You need what’s known as a Reg D Private Placement Memorandum – PPM – in order to comply with federal and state securities laws.

If you plan on pitching your deal JUST to traditional venture capital, you do not need a PPM. However, well over 95% of start up companies are too small, too embryonic, to hit the threshold funding levels, growth levels and potential market caps to attract VC funding. Hence, over 95% of start up companies will seek their funding from private investors. Hence, over 95% will need a Reg D PPM.

Reg D is a securities law exemption for private placements that allows companies to raise investor funds without all the costly and overwhelmingly onerous legal and accounting requirements of a public offering of stock. To qualify for the Reg D exemption, you have to follow very stringent rules. One is having the PPM. Another is not soliciting the general public (this is a biggie.) Another is only pitching the deal to those investors who can really afford to take the risk and lose their money. Hence, they need to be accredited. It actually gets more complicated in that you can usually offer your deal to up to 35 unaccredited investors with most offerings, depending on how they are structured – but trust me when I say that you are better off sticking with the more sophisticated accredited investors.

If you want more detail on it, check out my web site – there you can see why you want to do this, some of the onerous penalties for not doing this (e.g. possible but not probable jail time), and the full listing of Reg D I got from the SEC. Also, from that same page, you can jump to the definition of an accredited investor.

Bonus: For more on funding documents, business plans, articles, tips and tools for entrepreneurs and start up company CEOs, you’re invited to visit my blog and web sites…and ask your own questions. While there, I invite you to download both a sample comprehensive business plan and a complete Reg D private placement memorandum (PPM) for FREE…

http://www.ShouldYouStartACompanyToday.com <~~~ The Blog + Free Sample Business Plan / PPM / Audio / More…

http://www.Virtual-Exec.com <~~~ Virtual Executive Mentoring and Consulting Services

Robert Lee Goodman, MBA, Ceo & Chief Dragon Slayer.

photo credit: BAIA

There has been a recent wave of websites and TV shows about people starting their own business and following that path from bright idea and individual entrepreneur to small business start-up and then potentially to multinational, depending on the product or service. But what kind of audience are they broadcasting to? Well, it turns out a lot of us Brits want to start up our own small business. According to Business Link, over 10 million of us would like to start up our own business at some point.

So the encouragement is there and let’s face it, a lot of us like to be the boss. However, the whole process is easier said than done. The people who took part in the survey were asked what the main obstacle to starting up their own company was. Many cited financial concerns, be it the current UK financial climate or perhaps their own overdrafts, mortgages and debts. How would they cope if they started, but couldn’t generate enough initial funding to keep it going? After all, they’ve got the idea, the business plan, the desire, and maybe even a few colleagues. But how do they find the right people?

Well, for most of us non-millionaires, the main thing we need to do is to generate capital for the business. Since start-up companies have no established brand name and no financial records, loans are pretty much impossible. This means the entrepreneur needs to look at other ways of finding potential investment. This can be done via venture capital funding, courtesy of private investors that can run the business with you (basing their funding terms on how your business performs in the early stages of investment) or with business angels, also known as angel investors, who are usually individuals or groups of people that provide the investment in exchange for partial ownership of your company.

Where can we find these people? Well, several websites have made that gap a lot smaller. Sites like the Angel Investment Network allow UK entrepreneurs to post ideas for start-up businesses, along with details such as which market sector (be it within the UK or globally), industry niche, and what sort of investment you are looking for. The network also allows angel investors (both in the UK and abroad) to browse through entrepreneurs’ proposals based on their own investment criteria and interests. Business partnerships and new start-up companies are evolving on a daily basis, and the Angel Investment Network database now has over 60,000 members.

Mike Lebus works with UK entrepreneurs seeking investments, via the Angel Investment Network, which has since expanded into a worldwide network of websites that help entrepreneurs connect to angel investor groups around the world.

photo credit: Nabeel H

Often people ask us whether there are loans for starting their own businesses. And from time to time we receive inquiries about work-at-home business loans. In order to understand whether these loans exist and what are the requirements to get them, there are several concepts that need to be clarified. Some terms that have to do with the loan industry are used without caution and thus, generate much confusion. Following, some clearing up:

Business Loans Are For Running Businesses

The business loans that banks and financial institutions offer are for running businesses with at least three years of existence. Though there are loans for starting up businesses, these should not be called business loans. Moreover, business loans are granted to the actual business that needs to be legally constituted and subject to all the federal and estate regulations on the matter.

Government Loans and Grants For Starting Up a New Business

Though there are government grants and loans for starting up a business, when it comes to work-at-home businesses, there is not much government aid. The reason is simple; the government needs to foment businesses that generate income and jobs and work-at-home businesses can not provide that. Nevertheless, for those with physical difficulties or home-confined relatives, there are solutions provided directly by government agencies.

Personal Loans for Starting Up A New Business

Therefore, if you are thinking about starting up a new home based business, the best solution to your financial difficulties is to apply for a personal loan. Personal loans can be used for any purpose and so, they can also be used for setting up a new business. The loan amount you can obtain is never too high but for a home based business, you can get enough money to get you started.

Getting approved for a personal loan is not a complicated task. Personal loans are awarded according to your income and credit rating. If your credit is not that good, you may want to consider applying with the aid of a co-signer or resort to secured forms of financing like the one explained next. If you have a bank account and a history with a financial institution, your chances of approval with that particular lender will be higher. Hence, your bank or the financial institution you work with more often should be your first choice for a lender.

Home Equity Loans for Starting up a New Business

If you need a higher amount to finance your work-at-home business project, home equity loans are the best solution. With just a little equity left on your property, you can obtain inexpensive financing for your home based business. Moreover, the repayment program can be a lot longer than with personal loans and the costs will be significantly lower because the rates associated with these loans are very competitive.

Furthermore, there are also home equity lines of credit available that provide more flexibility for your business because you can repay the amount owed as you want and withdraw money again as you need it without worrying about fixed monthly payments.

Sarah Dinkins is a financial advisor who has been associated with Unsecured Personal Loans since long ago. She also holds a master degree in economics from Harvard University. To find Online Bad Credit Loans, Personal Loans, Debt Settlement Programs, Bad Credit Auto Loans, Poor Credit Mortgage Home Loans visit http://www.badcreditfinancialexperts.com