10 PEOPLE WHO MIGHT INVEST IN YOUR BUSINESS
It’s always good to get a loan offer from your bank, but sometimes you don’t have the assets to offer as security. Alternatively, you might simply not want to risk too much, however much you believe in your new venture. Here are ten people you might ask to invest in your business.
- YOURSELF – Remember, the more you can invest yourself, the more others will be inclined to put in themselves.
- YOUR MORTGAGE LENDER – Increasing the mortgage on the family home is the traditional and cheapest way to raise business capital.
- PARENTS – Be honest with them. You are probably a beneficiary of their will so all you are actually asking for is an advance. Check for tax benefits. Do not however, jeopardise your family relationship.
- SIBLINGS – Older brothers and sisters who are successful in their lives might be happy to invest in your success. Unlike parents though, siblings will want a healthy return on their investment.
- YOUR BOSS – If you’re currently employed, see if you can negotiate a voluntary redundancy package. Alternatively, see if the firm will lend you the money.
- YOUR LOVER – Does your lover love you enough to lend you the cash? Would his or her family invest in your venture?
- FRIENDS – People who believe in you might well be prepared to invest in your business. Several could club together to help you. They might also accept variable repayments, linked to how well you’re doing.
- A MAN IN THE PUB – Never underestimate those you know, but know little about. The man you drink with might well be a willing investor.
- SUPPLIERS – People who will benefit from your venture may not put in cash, but might well lend you equipment or agree to deferred payment for goods.
- CUSTOMERS – Your early customers may well be happy to invest in the business then take their return as discounted product or service.
Dr Hermann Hauser, founder of Acorn Computers and now a venture capitalist in Cambridge, says that the first port of call for anyone looking for additional funding should be, ‘family and fools’. What he means, is that those who have faith in you will be the most likely to invest. Those with money and little common sense should also not be discounted. It is a matter for you and your conscience how far down the ‘fools’ route you decide to go.
TONY
A graphic designer, Tony needed to invest £5,000 in computer equipment before going solo. Cautious by nature and reluctant to borrow money, he talked with Mark whose printing company his employer worked with from time to time. After swearing him to secrecy, Tony told Mark of his plan and asked for his advice.
What happened was that Mark agreed to buy Tony the computers he needed. In return, Tony would let Mark print the jobs that Tony designed. They agreed to consider the equipment a 2% commission on print so Tony knew that after introducing £250,000 of print, the equipment would be his.
Soon after starting, Tony won a design contract with a large animal charity. Within two years he had fulfilled his obligation and owned his computers. However, he still introduced work to Mark, who set aside the 2% commission to fund equipment upgrades for Tony’s business.
Reproduced from ‘The Entrepreneur’s book of Checklists’. Buy your copy here
