- From: Venture Planning Associates Inc. <Expert-zine@VenturePlan.com>
- Date: Sat, 13 Sep 2003 01:27:57 -0400
- To: site-comments@w3.org
Hi ,
As promised, here is your new issue of the Expert-zine.
Alternative Financing:
Venture Capital Is Not The Only Way
By William F. (Bill) McCready, Founder/CEO
Venture Planning Associates, Inc.
Formal Venture Capital is not the only way to finance your
venture. Although the following methods are not commonly known,
they are legitimate and effective ways to obtain business
capital.
Consider these scenarios:
BUILDOUT ALLOWANCES FROM LANDLORDS
Banks will often allow you to count buildout allowances as
capital (unless it has to be repaid) in your source and use
of funds statement. While the money comes in and goes out,
it does increase the overall cash flow and size of your deal.
Example: This writer recently counted $450,000 buildout
allowance of a $1.5 million deal as equity, when obtaining
a $350,000 loan for a client. The other $750,000 came from
the founders and investors. By counting the buildout allowance
as equity, the debt to equity ratios were much higher.
VERTICAL INTEGRATION
Capital can often be raised from outside companies with a
vested interest in developing either distribution channels,
or assuring themselves of adequate product flow from
cash-starved companies.
Two examples:
(1) A distributor invested in his supplier in order to assure
himself adequate inventory.
(2) An oil company franchisor provided startup capital for a
client when asked. Although treated as a long term loan by
the oil company (it only had to be paid back if the company
didn't reach its distribution quotas), it was a capital
infusion from the bank's standpoint.
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1. Business Plan Outline and Checklist
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3. Financial Fitness Quiz
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6. Dealing With Banks [how to get a loan every time!]
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*** ================================================ ***
PROFESSIONALS ASSOCIATED with the BUSINESS
Investments through architects, accountants, lawyers and other
suppliers can also be also be arranged. Just present a way for
investors to be more profitable in their own companies through
the proposed investment.
Today, law firms, advertising agencies, executive recruiters
and professional consultants will often accept partial payment
in stock, warrants or options in return for services. This is
an excellent way to build a powerful team of professionals
with a vested interest in your success and your success in
raising capital.
Many of these professionals are also angel investors, who can
champion your cause with other private investors. Do not make
the mistake, however, of assuming that you will get both and
investment and discounted services from the same group. They
will generally risk either their time or their money, but not
both with your company.
WHITE KNIGHTS
If you are a retailer with poor credit, and cannot get
merchandise shipped without a direct payment, have someone
with better credit buy the products and resell them to you.
You may pay a premium (3% - 6% per order), but the White Knight
will collect a few percentage points each month. If you have
a high turnover ratio, it will allow you to reestablish cash
flow and credit. Only a few specialists handle these types of
operations, but you can find them through factoring companies.
TECHNICAL or PROFESSIONAL EXPERTISE
Many professionals are willing to reduce their fees in exchange
for equity. This method is used as part of a corporate strategy
to acquire equity in a large number of companies. Although the
services will not be totally free, they will usually reduced by
about 50%. You may even be able to arrange options or warrants
to avoid initial dilution. Plus, you can provide the
professional with an exit strategy prior to an IPO, if another
large investor enters your market.
SELL LICENSES or MARKETING RIGHTS
Selling off rights to foreign or geographic markets, or private
labeling products, is an excellent vehicle for young companies.
You can use both exclusive and non-exclusive arrangements. All
methods should have some type of quota and non-compete clauses.
The downside is that later investors may feel that you have
Sold off too much of the potential, so they will not invest
as readily.
*** =============================================== ***
TWENTY TWO OTHER ALTERNATIVE FINANCING SOURCES
Although there are at least twenty two other methods for
raising capital other than formal venture capital, the
ideas above may be enough to get you started. You may
also find that combinations of these methods work well.
Or you can order our special report that details the
twenty two other methods. To order, go to
http://www.ventureplan.com/ordering.html#7Reports
and click on Report #2, 28 Ways To Finance Your Venture.
*Many sites tell you where to get funding. We show you
how to get it!* Bill McCready, CEO/Founder
Venture Planning Associates, Inc.
For more information visit http://www.VenturePlan.com
*** =============================================== ***
Visit these Venture Planning Associates, Inc. sites:
www.360WebMarketing.com Offroad Web Marketing
www.ventureplan.com Entrepreneur Resource Center
www.VentureMap.com Roadmap for Street Smart Entrepreneurs
www.ventureexperts.com Sales Site for 7 VC Reports
www.Expert-Zine.com Entrepreneurial Finance Newsletter
www.FuturesTradingSecrets.com Online Trading
*** =============================================== ***
Watch for the next issue:
* Show Me the Money” Secrets of Business Finance *
*** =============================================== ***
This FREE newsletter is distributed by subscription only.
____________________________________________________________
http://www.expert-zine.com / http://www.ventureplan.com
Teri McCready, Publisher
Tel. (858) 457.3434 / email: marketing@ventureplan.com
5370 Toscana Way San Diego, CA 92122 USA
Copyright 2000-2002, Venture Planning Associates, Inc.
ISSN: 1529-1316
Everyone's an expert in something, but almost no one
is an expert in everything!
Teri McCready, Publisher, Expert-Zine
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Received on Saturday, 13 September 2003 01:49:59 UTC