Having a solid idea is a great way to start thinking about your business, but it’s not enough to actually get things going. Money won’t come in on its own. Founder and CEO of the James River Capital, Paul Saunders, knows what business funding entails and has tips for those looking to make sure yours has the financial backing it needs.
A lot has changed since James River Capital opened its doors in 1995, but some of those older methods still apply today. “Bootstrapping,” for example, is when you reach into your personal savings, borrow from friends and family, and/or seek out lines of credit to fund your business venture. It may not cover all your expenses, and some may have more resources than others, but bootstrapping is a quick way to start. Some investors might see this as an indicator that your business is worth the investment since you’re personally invested as well.
Saunders knows that bootstrapping isn’t viable for every entrepreneur, but luckily crowdfunding is now an option. Through platforms like Kickstarter, you can go directly to the public with your business idea and supporters can buy-in to your product or services before their ready for market. Incentives like branded merchandise or exclusive can encourage those supporters to donate to higher tiers in your campaign.
This method will require aggressive marketing to make sure potential supporters can donate before the campaign comes to a close. If you have a strong presence on social media, this method may be easier to get that message out there and people following your links.
A more traditional route is loans. Banks of different sizes regularly extend loans to entrepreneurs. Saunders notes that they tend to have generous interest rates for small businesses, but the process takes a longer time to process and will scrutinize your credit standing. Learn more: https://www.behance.net/jamesrivercc
Then there’s your local Chamber of Commerce when Saunders thinks many entrepreneurs overlook. They are a reliable source of counseling and information regarding funding for businesses within the community. Working with business centers can prepare you to speak with local investors, who are eager to help fund the development of their town or city.
Venture capitalists are always looking for companies they can give high returns, some times as high as 10 times their initial investment. This high expectation is why Saunders cautions entrepreneurs before seeking out venture capitalists for funding. They’re also tough to impress, requiring a thorough and detailed presentation to have any hope of funding.
Whatever path you seek, Saunders knows that starting a business is difficult. If one method doesn’t pan out, step back, reorganize, then go a different route. Beyond funding, running a successful business requires persistence.
About Paul Saunders:
Paul Saunders founded James River Capital in 1995, where he remains as CEO. He holds business degrees the University of Virginia and the University of Chicago and got his start in the Corporate Finance Department of Warburg Paribas Becker and the Commodity Department at A.G. Becker