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Startup capital?

July 15, 2012

Bill Bernhard, an old friend and ex-employee commented

“My issue is as a small business owner it is impossible to find any working capital infusion. The banks won’t help, the government won’t and any individual investment or angels are hard to find in my area. What is a business owner to do. We have the plan, it works but to make it work as it should there isn’t enough liquid capital to fund it. Its “rob Peter to pay Paul”

He’s right…

It’s never been easy to start or build up a business but I suspect the popular culture has got us believing in a bit of a fairy tale.  Most startups are funded by the savings of the founders, their friends & their family.  Very few get any funding from banks, angel investors or venture capitalists.  Sucessfully growing small businesses quickly learn to find capital in more predictable places.

  • your vendors.  Ask for longer terms on purchases and get faster turns on collections.  If you use expensive equipment, ask the manufacturer for financing help.  Managing your cash flow well is like a no-interest loan.
  • your landlords.  Good tenants are always hard to find.  If you’re one, your landlord might help finance improvements & fixtures so you don’t have to.
  • your customers.  For any new business, the most important source of startup and growth capital is profits!  When you provide a service to them that is worth more than it costs, the result is a profitable business.  Profits are your customer’s way of telling you they want you to grow.  If your growth is limited by a shortage of liquid capital, improving your services and reducing your costs will create the self-funding mechanism that can get you growing again fast!

Once your business can fund growth from profits, you’ll be covered up with eager investors.

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