(Add to Favorites | View All Articles | Resource Directory)
|
|
|
Forming a Corporation - Investors
You've come up with the best idea since sliced bread, figured out a business name and formed a corporation. There is, however, one small problem. You need money. Welcome to the world of investing. Business Funds Unless Bill Gates is your friend, money is going to be a problem for every new business. Even the might Google had to hunt for cash with one of the founders of Sun Microsystems finally kicking down a much needed $100,000. Whether you decide to pimp your business plan to anyone breathing or beg your step-mother for funds, here are some issues to consider. Investors are looking for the best deal, to wit, the most stock possible in an entity. If you are asking them for cash, they have the leverage. Don't be so desperate that you give away the farm. All to often, I speak with individuals who started a business on a whim and have become disillusioned because they have lost equity in the business. Assume I start a corporation and need funds. My neighbor agrees to kick in $20,000 for 20% of the stock. Things go great, but four months later I need another $50,000 for inventory and cash flow. My aunt agrees to kick in $50,000 for another 20% of the stock. Yikes, I am not even through the first year and I have given up 40% of the equity! What happens in year two when I need a $100,000? I give up more stock and suddenly own less than 50% of the business. Inevitably, this leads to feelings of resentment and bitterness. "It was my idea, but now these blood suckers are going to get most of the money and they aren't even working on the business." This sentiment is so common that it would be laughable if it weren't so depressing. As a general rule, you should only sell ownership in a business as an absolute last resort. Instead, try to get loans from investors, banks, home equity lines and even credit cards. If you must sell stock to raise funds, be very careful when valuing the stock. You should place a value on each share as though the company was already a raging success, not just starting out. Further, make sure you sell only small allotments of stock such as three to five percent. If you owned IBM, how much of the ownership would you sell for $20,000? In Closing When starting a corporation, guard equity as though it is the Holy Grail. If you don't, you risk becoming a disillusioned shareholder down the road. Richard Chapo is with http://www.sandiegobusinesslawfirm.com - providing legal services to San Diego businesses.
MORE RESOURCES: News provided by Yahoo! News and Google News Video: Are small business credit cards worth it? Business calendar Reserve Now for Miami Herald Small Business Forum 5 factors driving a surge in small-biz acquisitions - Crain's Chicago Business (blog) Small businesses can get online help |
|
|
|
RELATED ARTICLES
Forming a Corporation - Investors You've come up with the best idea since sliced bread, figured out a business name and formed a corporation. There is, however, one small problem. Business Plans - What Consultants Don't tell You! Do you have a Business Plan? Congratulations, but you are in a small minority. And if you have a plan, is it integral to your business, and instrumental to its growth? If the answer to this question is yes, then you need to read no further. Determine what kind of clients you wish to attract "I don't know the key to success, but the key to failure is trying to please everybody."--Bill CosbyHave you ever had clients that were more trouble than they were worth? Maybe they were always late to pay, or didn't do what they said they'd do. Making a Donation to Bring MORE Business How a donation is different from a sponsorship and what is the advantage to you?Donations are different from sponsorships, as a sponsorship is more likely to headline you for an event whereas a donation will let you be listed as one of the many donors. You do not need to headline every event to get business attention; you can simply donate an amount of funds and be listed. But Weve Always Done It This Way Sacred cows take a long time to die. We get comfortable in the way we do things and lose sight of how they could be improved. Boat Detailing Tips and Procedures Auto detailers are often asked to clean boats and detail boat trailers. There is an easy and efficient way to do this with little effort. Self-Confidence doesn't happen - it is acquired At first blush this idea might be difficult to wrap your brain around. That's because you've been taught that self-confidence is achieved through mastery of knowledge or skills. Everything I Need to Know About Business I Learned From My Nametag So there I was - sitting in the audience of an on-campus seminar. Surrounding me sat hundreds of fellow students; each of us wearing one of those little, handwritten, adhesive nametags. How to Manage Your Pipeline How is your pipeline structured?I assume most of you have heard about the sales pipeline. Your pipeline is what keeps your business going. Without a plan, your business has a 92% chance of failing Before you start a business we encourage you to prepare a business plan. Without it your business has a 92% chance of failing within the first 12 months. Private Investigator Tactics A Private Investigator is a professional trained in the art of investigations and surveillance. Otherwise known as Private eyes or, these professionals are for hire 24 hours a day 7 days a week. Mobile Carwash; Senior Citizens and Mobile Homes Senior citizens are generally not a large marketing segment for mobile detailers or car washers, however, they should not be ignored. You will find in a near by area a seniors-only mobile home park. How to get the marketing ball rolling for your small business The success of your business depends on your ability to build marketing momentum. Without the ability to generate new sources of leads your capacity to sell will slump and the growth of your business will stagnate or shrink. A Business Tail: Veterinarian Foams at Mouth, Chases Tail, Learns New Tricks--Case Study Many self employed professionals find themselves overwhelmed, frustrated, and confused when it comes to running their businesses. The deep skills they have in their professional field do little to prepare them for the dog-eat-dog world of running a business. Routine Maintenance of High Pressure Hot Water Motors If you run a pressure washer business you need complete uptime on your equipment, break downs can be costly if your billing rates are $100 to $150.00 per hour. How to Start Home Based Travel Businesses Home based travel businesses are no longer the wave of the future. Home travel businesses are the hot trend right now. How to Find A Group that Needs Speakers How do you find groups that are in need of speakers (at no charge)?Finding groups that use speakers is not difficult. I find that most organized service groups use speakers for their regular meetings. Boston Suburban areas a good choice to run a business BioTechs even with the latest news had shed over 1000 jobs two years ago, as it was reported by The Financial Times, WSJ, and Bloomberg that only 17 of the nearly 1300 BioTech firms were actually profitable. In 2002 the number of jobs were in the 30,000 range in Biotech. Do Your Best; Hire the Rest One of the hidden perks of raising six children is the learning laboratory it provides for the parents. My wife and I have learned how important it is to teach our children to do things for themselves and become problem solvers. Measuring Your Way to Success Are you a motivational speaker who consistently gets rave reviews yet your ratio of speaking to return rate is not where you would like it to be? Perhaps you are a trainer whose delivery is complimented time and again, and yet you are only being asked by 10 to 20% of the clients you see for a repeat performance?Are you starting to think that there is something wrong with your message or delivery despite the rave reviews? Maybe you were wondering if your fee is too steep. That may be a valid concern when organizations are faced with discretionary spending, but the rule of thumb is that you are only charging too much if more than 1 in 5 people complain about it.
|
| Home | Site Map | Privacy Statement | More Articles |
| © 2006 |