Small Business Growth Pattern:
Where Does Your Company Stand?
and Where Is It Going?
Funding options are often determined by small business growth status.
Below are a few of the most popular funding sources, including small business loans, SBA loans, bank loans, venture capital investors and angel investors. Determining the best source for your company isn't always easy. But you do need to gear your whole business plan and presentation to the source that is most likely to fund your project. So choose wisely, and be ready to change direction at any time.
Here's a quick summary of small
business growth funding that you may be looking at. There are,
however, no hard and fast rules. The best funding for your company
is often the one that you can get.
| Boot- strap |
Angels | VC | SBA | Leasing | Grants |
Altern- native |
|
| Pre- Start Up |
YES | YES | YES | ||||
| Start Up | YES | YES | YES | IFFY | YES | YES | |
| Established | YES | YES | YES | YES | YES | ||
| Buy Out | YES | YES | YES |
And here's a bit of explanation on the Small Business Growth financing possibilities:
| Type of Funding | What it is | |
| Pre-Startup | |
You've got a great idea, but aren't
sure how to make it a reality. You probably don't have a
full fledged business plan at this point. |
|
Start Up
|
Angels, bootstrapping and friends are the best sources. This is a very diverse group. Aunt Hennie may donate her empty garage for the business; a retired business person may invest $100,000; a major customer may advance $500,000 against the first year's orders; the previous owner may take back a $250,000 Note payable over 15 years. |
This is the money that gets your
company off the ground. The further you can get on your own,
the better off you will be in the long run. At this stage,
there is typically little or no "company" to speak of. You
may need to file corporate papers, locate your office, even
identify your first business. But, you should have your
business plan completed, and be ready for funding. |
| Ground Floor Company |
Your options start expanding here.
Consider: * Leasing equipment, * Negotiating a better lease; * Line of credit; * SBA loan; * SBA Mentor-Protege Program * Venture capital |
1 - 3 years old. Your company is probably still establishing its foothold in the industry. |
|
Established
Company
|
If you credit is good, lots of options will be open for you. If your credit is not good, very little will be available. | 3-5 years old. Established in the industry. |
| Company Buy Out | Creditors will want information both on you, your previous company, and the history of the company you are purchasing. Depending on what those things say, you may have lots of options, or none. | If this is already a strong company financially, you should be in great shape. If it's not, life will be tougher. You will have to prove how you can make it into a financially strong company. |
|
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Jasmine
McAllister |
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