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Opening a business: Acquiring funding?
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    Opening a business: Acquiring funding?

    A friend of mine and I have come up with an idea for a business. We're pretty sure it is something that has the potential to become a leading name in the branch of industry we're going for...

    However... We just don't know how to approach it and where to get funding...

    The only thing we've thought about is just loans... Are business loans different from others? I know my friend has great credit being 23 fresh out of the Army supporting himself and already owning a fairly large house that he put over half the house's value for downpayment giving him an incredibly low monthly rate.

    My credit is very outstanding for what I own, however my personal assets/net worth are nothing as large as his. With that said, I don't really want to take out a loan for a business we're trying with, let alone it would be my first loan.

    If we can only acquire the funding... We should be able to get somewhere...

    Ideas?

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    SoCalEuro Member Slapshotnerd's Avatar
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    Re: Opening a business: Acquiring funding?

    it's called venture capital.

    Submit a business plan to rich people, and tell them what sort of return-on-investment you will provide them. If they think it's a good idea, they will invest in it. if not, they will tell you to go kick rocks.

    PS - securing venture capital is a full-time job for some people.
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    Re: Opening a business: Acquiring funding?

    If you could explain it a bit more, that'd help. I think I get what you're saying...

    But with this business. We're having a bit of a hard time explaining to people what it is without it running yet... We don't want the idea taken out right from under us if you know what I mean.


    Hmmm...

    Confidential information
    Unlike public companies, information regarding an entrepreneur's business is typically confidential and proprietary. As part of the due diligence process, most venture capitalists will require significant detail with respect to a company's business plan. Entrepreneurs must remain vigilant about sharing information with venture capitalists that are investors in their competitors. Most venture capitalists treat information confidentially, however, as a matter of business practice, do not typically enter into Non Disclosure Agreements because of the potential liability issues those agreements entail. Entrepreneurs are typically well-advised to protect truly proprietary intellectual property.
    Limited partners of venture capital firms typically have access only to limited amounts of information with respect to the individual portfolio companies in which they are invested and are typically bound by confidentiality provisions in the fund's limited partnership agreement.

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    SoCalEuro Member blueabdjetta's Avatar
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    Re: Opening a business: Acquiring funding?

    you can also contact the sba and find out what resources they have. The government always has some kind of assistance to get business going..... especially so they can tax them later lol.
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    Re: Opening a business: Acquiring funding?

    There is a few ways you can do this.

    I have to run to work so I will just make it quick.
    You'll need a business plan for almost everything, so make sure to have something ready to present.

    Angel investors: You give them a percentage of the business for their money.
    SBA Loan: You need to be incorporated to get this loan and I think you need to be an established company as well.. I am not so sure though.
    Go through a bank: Lines of credit, equipment loans, short term loans.. etc.

    And depending on what you need some companies will let you pay off the equipment in monthly payments.

    Thats all that I can think of off the top of my head.
    Good luck!
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    Re: Opening a business: Acquiring funding?

    Thanks guys. I read up on Seed Funding and it seems like a way we can start this... I'ma read up on Angel Funding shortly.

    The idea of:
    Seed funding involves a higher risk than normal venture capital funding since the investor does not see any existing project to evaluate for funding.
    All we have is business plan so far. We don't actually have anything to "show".

    I really appreciate the help you guys have tipped in such short time, it's really giving me a better outlook on this and making it sound more of a reality versus hours of talking over a cigar.

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    SoCalEuro Member Batrugger's Avatar
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    Re: Opening a business: Acquiring funding?

    I am pretty sure that there are small business grants for military veterans. Check out the VA.
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    Re: Opening a business: Acquiring funding?


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    SoCalEuro Member Slapshotnerd's Avatar
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    Re: Opening a business: Acquiring funding?

    Seed funding is usually for people who are working on their 3rd or 4th company and have a previous track record of success. You won't get seed funding.

    You'll probably have to setup the company and take on your own debt to get started. Make sure you get the business agreement between you and your partner in writing before you start anything - who's going to fund what, who takes what percent of the fall / victory, etc. This WILL ruin your company in the future if you don't get it sorted now.

    Venture capital really shouldn't be taken on until you reach an inflection point of needing massive funding to support major infrastructure changes to continue to grow.

    I've done a LOT of research on funding businesses and running your own business particularly with the goal of a buyout or going public in the future.... but this is the end of the free advice from me
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    Re: Opening a business: Acquiring funding?

    Unfortunately, the best way to go is to use your own funds. Small business loans are very hard to get for an unproven business. Venture capitalists will want to see value before they'll give you anything. Angel investors will give you money up front but usually smaller amounts for a larger piece of your company. On top of all that, anyone that will give you money will likely want to see you having your own skin in the game.

    A lot of small businesses start off with personal savings, loans from family/friends, and credit cards. That's probably why so many entrepreneurs have bankruptcies in their past.
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    Re: Opening a business: Acquiring funding?

    Quote Originally Posted by Batrugger View Post
    I am pretty sure that there are small business grants for military veterans. Check out the VA.
    For sure, my friend is a step ahead and is actually looking into it.

    Quote Originally Posted by Rhynolite View Post
    I'll check it out, thanks.

    Quote Originally Posted by Slapshotnerd View Post
    Seed funding is usually for people who are working on their 3rd or 4th company and have a previous track record of success. You won't get seed funding.

    You'll probably have to setup the company and take on your own debt to get started. Make sure you get the business agreement between you and your partner in writing before you start anything - who's going to fund what, who takes what percent of the fall / victory, etc. This WILL ruin your company in the future if you don't get it sorted now.

    Venture capital really shouldn't be taken on until you reach an inflection point of needing massive funding to support major infrastructure changes to continue to grow.

    I've done a LOT of research on funding businesses and running your own business particularly with the goal of a buyout or going public in the future.... but this is the end of the free advice from me

    Interesting points and stuff made. The advice given is really great, thanks a ton.

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    SoCalEuro Member DTolo's Avatar
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    Re: Opening a business: Acquiring funding?

    If you are trying to prove the profitability of something that doesn't exist yet, then you should think about statistics and make models. Use legitimate sample data to build your models. If nobody is doing what you intend to be doing (which rarely happens but it's all in how you present and position yourself), then you will be making models of a sort of blind-forecast.

    Think:

    There are "This many people" that have a desire for "x"
    These people spend "x amount" on average filling these desires each year/month/day.
    We can provide "desire x" for "x amount of money" and in a manner that they will return.
    We can support and provide an expected customer base of "x amount" of people, selling "x amount" of items in years 1, 2, 3, etc.

    Identify the Lifetime Value of your customers, 5 year value, 3 year value, etc. Then show how many customers you will need, and if the market will support that many in order for your investors to see profit.

    That's my one-semester-short of a business degree advice. I've never run a business or had the guts to pitch to investors, but this is the same advice my business consultant type professors have given me.
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    Re: Opening a business: Acquiring funding?

    Quote Originally Posted by DTolo View Post
    If you are trying to prove the profitability of something that doesn't exist yet, then you should think about statistics and make models. Use legitimate sample data to build your models. If nobody is doing what you intend to be doing (which rarely happens but it's all in how you present and position yourself), then you will be making models of a sort of blind-forecast.

    Think:

    There are "This many people" that have a desire for "x"
    These people spend "x amount" on average filling these desires each year/month/day.
    We can provide "desire x" for "x amount of money" and in a manner that they will return.
    We can support and provide an expected customer base of "x amount" of people, selling "x amount" of items in years 1, 2, 3, etc.

    Identify the Lifetime Value of your customers, 5 year value, 3 year value, etc. Then show how many customers you will need, and if the market will support that many in order for your investors to see profit.

    That's my one-semester-short of a business degree advice. I've never run a business or had the guts to pitch to investors, but this is the same advice my business consultant type professors have given me.
    being 5-years removed from school, this is pretty much the same stuff that I work with on a daily basis at my current job

    life time value, expected break-even point, SWOT analysis, etc...
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    Re: Opening a business: Acquiring funding?

    Sounds like very solid advice. Thank you very much. We're just trying to figure out a foundation... We want to get the ball rolling by the end of the year atleast...

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    Re: Opening a business: Acquiring funding?

    The amount of investment you require will depend on the amount of capital investment required to get your business off the ground, some types of businesses require more than others.

    Several different funding models:
    - bootstrap it
    - microloan
    - traditional bank loan
    - angel investor
    - venture capital

    Advantages & disadvantages to each, but I'd advise you to try and bootstrap it, if you can.

    Something to bear in mind: if it's a good idea, and it's not protected by a copyright or similar (and sometimes even if it is), especially if it's a product and/or it has a healthy profit margin, expect other businesses to copy it.

    Definitely look up SCORE for free / minimal cost business advice i.e. http://www.score.org/, or from your sig in your area: http://www.scorephoenix.org/

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    Re: Opening a business: Acquiring funding?

    Nice! I think we'll attend one of those seminars one of these days... Hopefully before I move in a couple weeks.

    Thank you!

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    Re: Opening a business: Acquiring funding?

    Wut's the business you wanna open???


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