Angel Investors – How to Interest Them in Your Business

Angel Investors are considered by many to be the best type of investor in your business. Angels are usually successful business owners and entrepreneurs who can also bring you valuable industry experience, executive knowledge, creative ideas and contacts. They can usually afford to indulge their love or risk and are often seeking new business challenges. To be an angel in the USA, one must be an “accredited investor,” which the Securities and Exchange Commission defines as someone with a net worth of at least $1 million or an annual salary of at least $200,000. Similar rules exist in other countries.

So how do you attract and investor to your business and are they really what you want?

Build a Convincing Case: Angel investors may be willing to take on more risk than most, but they still need to see a well thought out business plan with a proven product that has a recognizable and eager market need backed by a competent management and development team.

Establishing Your Market: Your angel will need to be convinced that your business will meet the market need and that there is a clear “barrier to entry” from competing companies. They will hardly want to invest in your company only to see your marketing advantage disappear. Typical barriers to entry are: patents, cost of development and proprietary processes.

Your Management Team: Angels they will want to know that their investment is in safe hands. They will want to know the quality and experience of your managers and that they are all committed to your company.

A Great Business Plan: This defines your business, market, potential customers and your goods and services as well as the strength of your management team. It lets your angel have a good idea of your financials and how they will profit from investing in your business. Your business plan is not only a great selling tool it also assists you in planning and developing your business, placing it on a firm foundation. Consider using a professional business planning service for this. Not only will they work with you in producing a great business plan, but a good company will identify your business weaknesses and suggest better ways to do things. By a good business planning company – that is not one that charges less than $500 – you’ll get a plan and nothing more. Look for a company that charges a rate that allows them to offer you consultancy, advice and assistance as well.

Put Your Money where your Mouth is: If you want to start a business, be prepared to invest your own money. Entrepreneurs who expect angels to risk money in their venture, should be as confident about their own money. Entrepreneurs who are not willing to assume such a risk are not considered serious by investors and will probably not receive funding.

Find the Right Angel: Angels typically invest in companies that they know something about. Identifying appropriate angels will increase your chances of success. When pitching, ask them what they look for in a company, how much they typically invest, what kind of return they expect on their money.

Expect the Angel to be Involved: Entrepreneurs should also be choosy about whom they take money from. Make certain that you really know your Angel, understand their motivation and expectations for exit strategy and ROI (return on investment). Your angel will probably want a seat on the board and definitely a say in how you spend their money. Be prepared for this – not only do they need to protect their investment but they also will have knowledge and experience that your company will greatly benefit from. Being able to answer angel questions without feeling threatened is crucial to building a professional and mutually profitable relationship. Knowledgeable angels with good connections can jump start a company and keep it thriving. Well-connected angels can even make it easier to get additional rounds of financing including venture capital.

Professionalism Persistence and Patience: Raising capital is a time-consuming, ego-challenging process. It is not unusual for a startup entrepreneur to spend 50%-70% of his time raising capital from angel investors, a process that can average 3-6 months and in an uncertain market, it take even longer. Efforts to horde stock, inflate valuations or produce unbelievable financials will make the company less attractive to suitors. Let experienced professionals – produce your financials and manage your legal activities.

Lastly entrepreneurs must be determined, passionate about their business and thick skinned. Remember this and good luck.

Working Capital Loans – Lifeline for the Success of Small Businesses

Working capital refers to the cash requirements of a business for its day-to-day operations, or more specifically the investment required for the conversion of raw materials to finished products, which the company sells out. In academic terms, working capital is defined as the current assets minus the current liabilities of a business. It is that amount of cash flow the business requires for its daily operations. It is a measure of both a company’s efficiency and its short-term financial health.

Large businesses have always had a number of alternatives to raise or maintain a positive working capital such as inventory maintenance, stock selling, issuing of bonds and accounts receivables financing among others. The lack of working capital and continuous cash flow leads to cash crunches for many new and small business firms. Small businesses often tend to find their current liabilities exceeding their current assets. Lack of proper working capital management often leads to trouble in paying back their creditors in short term and eventually into bankruptcy. Working capital loans are an ideal solution for small businesses, providing them a scope for rapid growth by meeting their short-term financial needs. Working capital loans are not usually for buying fixed assets and investments; instead they are used to clear up accounts payable, wages, short-term credits, advertising and other business obligations.

The lack of working capital and its proper management increases the risk of failure for many small businesses. It prevents them from growing and materializing on many available opportunities. Shortage of necessary working capital is one of the destabilizing factors for a small business. It can substantially jeopardize the regular operations due to the unavailability of essential resources in due course. Working capital loans complement the existing line of credit for the business and provide a continuous cash flow to fuel its growth. It assists the business when it needs to pay its bills and make short-term investments. Working capital loans, unlike the long-term loans, usually reach maturity within a range of one year.

Traditionally a collateral was essential to acquire a working capital loan, but innovative companies have come up now with loan programs that do not require any security. There are few basic factors that these lenders look at before they will agree to lend you money for your business. Credit history is one of the primary factors that lenders look into for settling a working capital loan for a business. The business owner’s vested interests and ability to repay are other factors taken into consideration by the lenders and clarified on the basis of previous financial statements. These reflect the hard work and personal financial investments along with the cash flow trends of the business.

Broadly speaking, though working capital loans are popular among small business owners unsecured business cash advance [] is probably a better alternative. Unlike working capital loans, the borrowers are not liable to repay any unsecured cash advance and those payments are settled against the borrower’s monthly credit card sales receipts. Business cash advance has also come up big way and is definitely a better finance option for small business.

Building Your Dream Franchise Business

Everybody dreams of becoming his or her own boss, but is it so easy to kiss your job goodbye? Yes, it is possible if you open a franchise business. Owning a franchise business opens limitless opportunities; you can become your own boss and lead a great lifestyle.

With all the resources available on franchise opportunities nowadays, locating your ideal franchise business has become much easier. There are plenty of websites that provide detailed information on owning a franchise business. These websites help potential franchise owners find the best possible franchise information on business opportunities and franchises for sale. These franchise directories are essential tools to help entrepreneurs find new business ideas for any new enterprises. Most of the more established franchise directories extensively cover the franchise industry sectors such as retail, business services, home improvement, food services, and senior care etc.

As there are a huge number of franchise opportunities available, how do you pick the right franchise opportunity for you? It is important that your interests match your choice of franchise business. To start with, carefully take stock of what you really enjoy doing, what you want out of your business and what you want to achieve out of life. Write down a list of your interests, desires and passions. What kind of jobs have you held before or what past opportunities have you explored? After you have reflected on these questions, give some thought on the type of franchise business opportunities that appeal to you and that can help you realize your ambitions and goals.

Once you are committed to buying a franchise business, your next step will be to decide which service or product you want to invest in specifically. You should also investigate the scope and the details of the franchise business you want to get into in terms of profitability, investment opportunity, market viability etc.

Before starting a franchise business it is a good idea to consult with experienced entrepreneurs in the same field of business. Owning and operating a business is a large commitment as it involves a lot of money, time and energy, so you do not want to be stuck running a business that you do not enjoy nor is the right fit for you.

Many franchise businesses opportunities in the United States are a perfect fit for small business owners starting down the road to entrepreneurship. Starting with a small business franchise makes sense if you are looking for an opportunity that is a safer investment than traditional business.

Explore the possibility of franchise business ownership if you want to lower the risk of owning a traditional business. Before investing in any franchise business, be sure to get a copy of the franchiser’s disclosure document. Established enterprises such as coffee franchises or restaurant franchises depend on their franchises to penetrate untapped market segments at a lower risk of failure. For any franchise business, the brand recognition and the high quality standard already established by previous chains provide a huge advantage to new franchisees.