Five Things To Consider When Deciding On a Business For You. - Part 4B

Where's the money? How is this going to be funded?

September 16th, 2024

E D I T O R I A L

By Dr. Gabriella Kőrösi - Managing Editor

Every Monday, I ask my friend, DR Rawson, to focus on business related to our magazine focus. It’s my opinion that you’ll find his insight unique. He’s started, purchased, or taken over thirty companies since he was twenty-one.

Now, at age seventy-seven, his knowledge is available to you. This particular business series should be especially important if you want to own or start a business.

If you have a question you would like him to address in the future, please leave it in the comments.

Thanks for reading this special edition.

Funding - Part 4B

How much money will you need, and where will the funding come from?

Here’s where it gets very real

You’ve already reviewed two groups of possibilities. Let’s review the final options.

1. Lending / Credit Cards / Loan Sharks - Business loans (collateral needed), and business credit cards. This can be the most expensive route you can take. Loan sharks (oh yeah, you would be surprised at the lengths people will go to if they’re totally committed and all they see is the money they think they will make) can be your worst nightmare.

2. Kickstarter / Indegogo / GoFundMe / (and more than ten others like the previous big three) / Angel / Venture Capital - This is a much better choice but requires much more work and acquired expertise.

Lending / Credit Cards / Loan Sharks

Lending is very common. We all get notices in the mail. Get X for Y per month. Suddenly, you’re thinking it’s only Y per month. Justification: If that’s the price to fund this next big thing or my next big idea, so be it. I’m sure I can make money quickly. Reality: Starting your own business is not a get-rich-quick opportunity. If you have to secure a loan to start your own business, then there are some things you need to do in order to do it the right way.

Lending done right. Begin with a spreadsheet that shows that taking a loan out has a reasonable chance of being repaid because the business has a reasonable chance of becoming profitable in a reasonable period of time. Go to business lenders. Ensure that your financial advisor, spouse, or others concur that the numbers make sense. Be transparent and remember this:

“Every CEO or business owner is accountable to someone, without exception.” ~ DR Rawson (Repeating what others have counseled before me.)

Credit Cards and Loan Sharks

The most financially and personally expensive way to finance your idea or dream. My counsel, please don’t. My father once told me, “If she’s the right one, she’ll wait for you.” I didn’t believe him. I jumped when I should have waited; the cost of that misadventure was almost beyond measure. I wasn’t the only one that paid a heavy price for my impatience. Wait.

Kickstarter / Indegogo / GoFundMe / (and more than ten others like the previous big three) / Angel / Venture Capital

All of these methods of funding are reasonable. Kickstarter / Indegogo / GoFundMe / (and more than ten others like the previous big three) are reasonable with strict guidelines and regulations. Thousands of entrepreneurs and startup businesses are using them.

Full disclosure: My company, TinyTales.Press will be using Kickstarter to fund our expansion. We hope to have our package ready for the first of the year.

Angels and Venture Capital are a great way to secure funding BUT you better have your facts and figures well in hand—preferably a business plan. It would be best if you sat with a financial person experienced in evaluating the value of new enterprises. Why? Both these funding methods will ask for a percentage of ownership. It won’t be inexpensive.

Being offered the money you need but giving up ownership of what you’ve created will be one of the most complex and gut-wrenching decisions you’ll ever make.

Good luck. Feel free to ask any questions you have.

Until next time…