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Coaching Your Small Business to Success
Coaching your Small Business to Success No matter how large or small a business you operate, hiring an executive coach is no longer a luxury – it’s a necessity in today’s highly competitive business environment. No matter what your management and...
Entrepreneur and Mom
When I was 12 years old, I had surgery with complications. I was told there was a chance I would not be able to have children. Growing up I could not imagine my life without children and worried about it often. When I got married close to my...
Organisation Tips For The Mobile Executive
Despite the fact that everyone sighs "How glamorous!", the life of the business traveller can actually be hell! Fighting international datelines, jetlag, airline food, hotel pillows filled with rocks, and the constant packing can turn an...
Small Business Q & A: Cut Start-Up Costs By Using a Dropshipper
Q: I'm starting an online specialty shop that sells gifts and home accessories. I want to be able to have items dropshipped to customers through my site. I already have a Web site and a domain reserved, but I don't have a lot of money to get this...
The Importance of Timely Timesheets
Whether you are a small consultancy firm, a medium sized accountancy practice, or a code warrior for hire in a back room of your house then you have at least one thing in common: you are in business to get paid quickly, and for the work you have...
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Securing Second- and Third-Round Venture Capital Financing
Widget sales are booming -– the competition is scrambling, demand is up, and the books are finally treading water. Your core management team has big ideas for the future of Widget Inc. Opportunity is abundant; but how will you fund that next big leap?
As your start-up matures, obtaining second- or even third-round funding may allow your business to expand and grow into new opportunities identified after your business was established. If your product or service has proven itself in the marketplace, you may be a candidate for an additional round of funding.
Some possible uses of post start-up funding include:
* Penetration of new markets, either by industry or geographic location
* Development of new products or services that compliment your key lines of business
* Acquisition of competitors, staff and/or facility expansion, or new equipment
Damage Control
If your company is struggling to make ends meet, post start-up financing is not an effective way to address red ink.
Consider other methods of debt management such as refinancing, streamlining systems of production, and bootstrapping before looking for additional funding. Investors will not be interested in extending additional funds to companies that have not yet established themselves firmly in the marketplace.
Identifying Post Start-Up Funding Sources
The best source for post start-up funding may be your original investment partner. However, sometimes asking your investor-partner for additional funds can be a lot like asking your parents for a raise in your allowance. You’re going to have to really prove a need for it, and even then, your original funding source may have woke up on the wrong side of the financial plan.
Should this prove to be the case, there are additional sources to consider, including:
* Lending institutions (banks)
* Venture capital firms
* New private investors
* Other professional service providers
within your core management team
If you developed a list of potential investment partners prior to start-up, renew your contact with these individuals. By telephone or letter, convey the success your product or service has experienced, as well as your purpose for the post start-up funding. With a solid track record in hand, you may be surprised to find how many potential second-round investment partners you have.
In addition, you’ll be in a stronger position during the negotiation process, meaning you won’t have to give up as much control to achieve your desired result.
Tips For Maximizing Post Start-Up Funding
* Don’t commingle funds. Avoid falling into the trap of using new funds to level the books. If you obtained additional funding for expansion, do not deviate from the plan. Address any cash flow problems or existing debt service independently from your company’s expansion needs.
* Learn from past mistakes. Undoubtedly, your company’s start-up phase was a learning experience unlike any other. Recall the lessons learned from handling your initial start-up capital. Now that you’ve established a strong working relationship, call in your management team to gather additional opinions on the best way to disburse funds on each project.
* Look for new opportunities along the way. As you implement your expansion plan, be on the lookout for ways to streamline and maximize the results of your efforts. Don’t be afraid to upgrade your plan; remember that your business plan should be a “living” document, able to flex as the status of your market and the general economy change.
About the Author
Jim D. Ray is a seasoned entrepreneur and president of Web Presence, a national web design firm exclusively serving the small business market sector. To learn more, or for a free quote for your own web site, visit the Web Presence web site at: http://www.web-presence.net.
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