Whether it is working
capital the enterprise requires or funding for capital expansion, emerging and
established businesses must think creatively about capital formation. Prior to 2008, it was the business start-up
that sang the blues about being shut out from commercial bank loans. Now all
small businesses (businesses having 100 or fewer employees) feel the pinch.
There are other
avenues for capital formation to consider.
For emerging businesses, the most important thing is not to go out on a
limb without ,at the very least, holding a part-time job. Money fuels the business, so have a source. Before
reviewing some options, it is time that one myth gets its proper funerary rites—replete
with a mausoleum. That myth is foundations
fund business start up and expansion. No
they don’t. In fact, The Foundation
Center has a statement on its website to the effect, “…foundations don’t fund
business start up or expansion. Rather, there is giving to individuals for
research, artistic projects, or small community projects.” An entrepreneur can
still do due diligence to uncover where are the millions of dollars for
women/entrepreneurs at The Foundation Center near you.
There are places
that give grants to businesses; however, the awards tend to be small.
For example, visit www.womensnet.net to apply
for The Amber Grant (up to $1,500) and www.peachic.com to apply for a grant ($500
- $1,000).
Rather than small dollars,
stick with the tried and true models for funding start ups which include having
a job; applying for a revolving loan fund; securing lines of credit; loan or
bond guarantees; participating in a Su-Su, and having owner’s equity.
With a viable business plan, a business can
present itself to angel investors (silent investors) and venture capitalists (give
business directives) that will put up money for viable business models.
For more information about angel investors
and venture capitalist in New York, visit The Funding Post website at
http://www.fundingpost.com/angelgroup/newyork-angel-investors.asp
or Tri State Ventures at
http://www.tristateventures.com/about-nyc-angel-investors.html.
If a small loan
will serve your business interest, then contact ACCION USA or Women’s Venture
Fund. Both offer microloans with low
interest rates to fledgling businesses.
Getting certified
with NYC Small Business Services, NYS Empire State Development Corp, the Port
Authority of NY & NJ, and other governmental small business agencies as a
Minority-/Woman-Owned Enterprise brings many services to a business. New York City Small Business Services’
Compete to Win initiative provides several great programs to advance a
business, one being procurement assistance.
There is the annual procurement fair.
To make the best impression, bring the company’s capability
statement. While you’re chatting with an
agency ACCO, give her the capability statement rather than a business card.
There are
business plan competitions with cash awards in the thousands. Using Brooklyn as an example, the Brooklyn
Business Library has the annual PowerUp! Competition that awards $15,000 and the
Local Development Corporation of East New York’s Women’s Business Center
sponsors an annual business plan competition.
The funding mechanism
that has taken businesses like a storm is crowdfunding.
Crowd funding is the online funding platform
that permits many people to make small donations or awards to a project. This
form of capital formation has become a global phenomenon.
Some social media experts point to the 1997
online funding of British rock band Marillion’s US tour by their fans as the
starting point for crowdfunding.
Popular
crowdfunding sites in the US include Kickstarter.com, Indiegogo.com, Rockthepost.com,
and Rockethub.com. These sites fund art and media projects.
The first few crowdfunding sites focused on
the creative scene but sites like Rockthepost.com fund small businesses, entrepreneurs,
and nonprofits.
People choose to donate
to a cause, nonprofit or business because they connect to the pitch or they
want the reward attached to making the pledge.
In fact, there are three ways projects get funded through crowdfunding:
pledging donations, lending, and investing. A most recent entry into this arena
is MedStartr.com.
Launched July 24,
2012,
MedStartr serves the capital
needs of biotechnology and all healthcare companies.
Use
LinkedIn and
Facebook to fund the enterprise.
The process for LinkedIn is to establish a
page for the business and then, add a campaign. With Facebook a page is created
and shared with other people. Request other people to “Like” and “Share” the
page, with the goal of getting at least 30 “Likes” to access other tips from
Facebook.
Engage people to “Like” the
page by offering discounts, a free download, or a coupon for a free item.
An enterprise can also create a Facebook Ad
that's seen on other Facebook pages. This is much cheaper than other forms of
advertising.
LinkedIn has Direct Ads
campaigns that you can use to raise funds for your business.
Why use Facebook or LinkedIn to garner
funding, sales and build relationships?
There are 150 million LinkedIn users in over 200 countries and Facebook
has 845 million monthly active users.
Finally, Cash
Mobs are people agreeing to converge on a particular store for one day to shop.
The arrangements are done through social media. The members of the “Mob” agree
to a dollar amount each will spend at the place. Cash Mobs arose to support the
small locally-owned retailers feeling the crunch of the big-box stores.
To learn more about it, visit
http://www.cashmob.com/.
