Continuing Conversations from the Corner Office
“Conversations from the Corner Office with Kamil Blaszczak”
“On Ways to Grow Your Business Without Venture Capital”
If you are beyond the start-up phase, and still need funding to really kick-start your business and take it to the next level, you are going to need funding. And before you seek out angel investors or venture capital (VC) money, you’re going to need to do your homework. Catching the last few episodes of “Shark Tank,” isn’t going to cut it.
Whether a company succeeds or fails depends in large part on how it is financed. And there are many ways to do that. From small business loans, to friends, family, venture capitalists and angel investors. But, which way is best? Banks have tightened underwriting standards in recent years, and so going after a bank loan is not necessarily the best way for today’s entrepreneur to get much-needed money.
Join an Incubator
One way to learn about financing methods as well as save money on overhead, is to join a business incubator. These are office spaces that are springing up around the country with shared amenities like receptionists, conference rooms, fax machines, scanners etc. And in many cases, the incubator is a place where you can find your next investor. There are several sites in our home area that have angel investors looking at the business plans of both their tenants as well as others on a regular basis.
Brand Your Business and Yourself
According to Kamil Blaszczak, Managing Partner of Z & R Funding, “The next most important thing is to be a go-getter. Make cold calls, cold email CEOs of other companies to explore partnership opportunities. Go after word of mouth recommendations. Get well-known in your industry. Brand yourself. This one thing, branding, may possibly be the most critical component of creating a great reputation for you and your organization. Branding. Branding. Branding. Oh, did I mention branding? No kidding about this one. It’s a key ingredient in your business success. It is how people perceive you. What they think of when they hear your name. And you want it to be first-rate. Because how people talk about you can make or break your reputation. And that will affect who wants to invest in your company. How much they will invest and how much control they will want to take. And how much they will allow you to keep.” He added that, “You don’t want to allow investors to come in and decide that you are the stumbling block to your businesses growth and have the very people who gave you money to grow your business fire you six months or a year down the road. Be your brand. Because who you are speaks volumes.”
Stay lean and customer focused. Create community. Build cheerleaders around your brand. Give customers your personal cell phone so they can call you when they need you. It’s what we do here at Z & R Funding. Call us crazy. But, we believe this kind of relationship building, to create customer loyalty is what sets us apart from larger companies who can’t be lean.
The traditional path to growth is by bringing in outside money. Venture Capital and angel investors are the primary way most businesses gain needed fund.
There are positive and negative aspects to both.
Angel investors might be doctors, lawyers, former business associates or seasoned entrepreneurs who are interested in helping out the next generation. Basically, wealthy people, willing to invest hundreds of thousands of dollars in your business in return for a percentage of the profits. Generally angels need to meet the SEC’s definition of accredited investors: A net worth of at least $1 million and earn $200K per year ($300K jointly with a spouse.) They give you money, you sell them equity in the company.
The upside is that they not only provide money, but can also mentor a young businessperson (especially since they have money invested and want to make sure you succeed so they get the payoff they want.)
The downside is you are giving away anywhere from ten to fifty percent of your business and run the risk of getting booted out if things don’t go well. So make sure they do! Like VCs, angels want to see that there is a plan in place and an end game, like an IPO or selling the company to a larger conglomerate.
When it comes to VC money, you should take it if you are ready to grow quickly and need significant capital to make that happen (usually more than $2 million.) When the VC had deep pockets and the entrepreneur can go back for more money when they need it. And when the VC can add greater value than just money. For instance, they have a great “Rolodex” and can network you with potential hires, customers, suppliers etc. And of course, when you and the VC have great chemistry and will be able to work well together.
When should you NOT take VC money? When the terms of the financing are not in your best interests. And when there is a chance that the VC is going to put undue pressure on you to perform. You may not like being told what to do by the VC and their representatives, who may also serve on your company’s board.
These are all critical things to consider when you are deciding which way to go to gain the much-needed funding for your business in today’s business climate.
At Z & R Funding, we understand all of this. We are entrepreneurs too. We understand exactly what you are going through. And we can make money available to you when you need it. Without your having to worry about our coming in and firing you. Or making your day-to-day life at work a drag because our people are in your office or sitting on your Board of Directors. Because we won’t be.
Give me a call at 888-237-6920 or email me at kamil@zrfunding.com for more information about Z & R Funding, where the right relationships are everything.
To read earlier installments of “Conversations from the Corner Office” here: http://zrfunding.com/821/from-the-corner-office/
And here: http://zrfunding.com/809/conversations-from-the-corner-office/
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