X-Phil
Imported Account
May 24, 2001, 7:13 AM
Post #3 of 3
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: I am looking to expand a digital video business...but financing is very difficult I've learned over the past 7 months. I have a couple of different plans for different levels of investment, but only pitch the appropriate one. I get some people interested, but its hard to get financing in such a service based industry. I am looking to sell equity as well... anyone out there to help? I have complete business plans and executive summaries...
: Best regards,
: Jeremiah Staes
Jeremiah --
Here's the true scoop. Most small businesses are financed through the donations of friends or relatives.
Banks need to see either 100% collateral (which your equipment purchases will NOT provide) or a very good cash flow coupled with a solid payment history.
The reasons are obvious. They MUST get their money back... with interest. And they KNOW the risks.
I've been through this both as a borrower and a lender and discussed the situation with many now successful friends. The ONLY successful financing I've ever seen (barring some off-the-wall government program you might luck into) is to get the money from people who know you.
Suggestion: (1) relatives, (2) friends, (3) vendors who have an interest in seeing your business expand.
Understand that if your financing comes from vendors, they have to be expecting your business to do a LOT OF BUSINESS with them if you are successful -- plus pay back your loan with interest.
Having said all that, there's always the practical alternative: bootstrapping.
Save your pennies and invest in your own business.
It's the ultimate in financing and nobody owns you.
Please don't take this as being negative. We've all been through it and had the hard facts rubbed in our faces when we were absolutely sure that the world would fall in love with our brilliant plans!
Best wishes!
-- Phil
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