From Seed Capital to Angel Investors to Venture Capital – Startup Company Financing Model

Seed capital/Seed round/Seed funding

Say, 3 people decide to start a business in biotechnology. They do so by incorporating a company limited by shares. They provide the initial capital. They are the only three shareholders. They are the founders of the company. The initial capital they provide is known as seed capital. The process of such injection of capital is known as a seed round or seed funding. The amount of money involved is usually relatively small – e.g., around US$10,000 or less. The money is primarily used to cover preliminary expenses such as market research and product development.

Angel investors/Angel round

As time goes by, the company needs further funding. The 3 founders, though with unlimited passion for their business, have limited wealth. The company is likely to still be in its preliminary stages – not generating any revenue, or with limited sales and earnings – but looks for further growth. It is not attractive enough for venture capitalists yet. This is when angel investors come in. They bridge the gap between seed capital and venture capital.

Angel investors are individuals who invest in startup businesses that exhibit high growth prospects. They are usually wealthy entrepreneurs or business executives who look to invest in companies that have a synergy with their own businesses, or that have high growth potential in its industry. Since the company does not yet have a profits track record, the risk involved is very high.

Venture capital/Series A financing

Venture capitalists provide venture capital to startup, high growth businesses with a prospect of achieving an IPO within a number of years (e.g., 3-5 years). Venture capitalists generally invest in the form of funds that are privately held limited partnerships (LP or LLC). A venture capital fund is a substantial pooled investment. Such funds may come from institutional investors such as pensions funds, endowment funds, insurance companies, foundations and corporations. Wealthy individuals may also participate in such funds.

Venture capitalists generally ask for convertible preferred shares. Most certainly venture capitalists will also demand a board seat(s) as this gives them more control over the company than being mere shareholders.

How to Multiply Your Company Finances

A successful business strategy should be easy to understand and apply in essence. Assuming you are in business, own a business and enjoy what it is you are doing these three stages discussed below if put into practice will change the way you think about your work and future. First of a few questions

What is your line of work?

Do you sell a product or a service?

Do you have a business & marketing plan?

If No why not?

If Yes look at it now, when was the last time you updated it?

The way to make money is to have a product that is of value and meets the need of your preferred market. Does this describe your product?

Assuming you passed the first test, you need to make enough people aware of your product in the most cost effective way possible. Some knowledge of marketing and advertising trends/medias are also required and or the hiring of a recommended expert.

Get these two right and you are on the way to making a comfortable living, But if you want financial abundance and security there are other steps to take, some people stop at this stage and think they have made it, and that’s only the ones who get to that point. Each year thousands of new businesses go bust, not normally due to lack of effort or desire but a lack of knowledge about what is required for their particular situation.

I will rephrase the saying “Knowledge is power” to “The right knowledge applied is power”. We all have knowledge up to a certain point.

The key is finding the right information and then applying it to your particular situation, the saying “horses for courses comes to mind” aim to be a horses for courses person not a blind leading the blind person.

The 3 stages for multiple growth are these, with a proviso have a plan (which is flexible) to;

1) Work in your business – Short term plan

2) Work on your business – Medium term plan

3)Work outside your business – Long term plan

“Failure to plan is planning to fail” Benjamin Franklin

If you cant see or plan for yourself in these phases it will limit how much your company can grow which will affect your growth also. Determine the minimum and maximum time frame these phases should be, generally speaking a short term plan is 0 to 2yrs, medium term is 2 to 5yrs and long term is 5yrs plus.

Stage1 – Working in your business

The start up phase, when you have been trying to get established and make a living in your business. You have more time than money and clients so you are able to perform many tasks within the company.

You don’t want to stay in here to long mind you. However it is good experience to be involved in the many aspects, from working in them you will be in a better position to refine, tweak or remove your processes and systems for when you have someone else to do it. The quicker you learn your lessons the quicker you will move on.

In this stage your business cannot function without you.

Stage2 – Working on your business

The mid phase you are still doing many of your day today activities and your business is breaking even and better, you are more interested in how to promote and market your product better as you realize the potential gains in this investment.

You realize your true value has increased (would the director of Sainsbury’s stack his own shelves or pay someone else to do it?) You realize the advantages of delegation to that end you plan towards it.
You are beginning to align your thinking to your new worth, to that end you are think inside and outside of the box and are being proactive not reactive. You have a plan which is exciting and achievable and stretching.
You welcome competition as it shows your potential clients just how good you are
Your business can function without you but only you are able to make major decisions or agree certain types of work, so you diminish your earning potential.

Stage3- Work outside your business

Your business is flourishing
Your stock has again increased,
You have people on hand to do the work you use to do
You are planning for the future ahead of the game,
You plan to expand and branch of into other areas.
You provide value and service
You understand marketing and people or have someone in your organization who does
You welcome competition as it shows your potential clients just how good you are
You are able to dip in and out of your company at ease and as hands on or hands of as you wish without loss of earnings.

Can the company work and generate finance without you? That is the true test of this stage. If not there are still some changes you can make if you so wish.

“If you realize the value of time and your expertise you will do the things that few can do and find someone to do the things that many can do” Roger Millar

On the articles section of my website I have a link to an extract from a book called “The hands of Manager” written by Steve Chandler for those who are struggling with the concept and benefits of delegating or outsourcing work, this may be helpful to you. http://www.7ask7.co.uk/e-books/Business_Coaching_Sample.pdf

Finally your business success or not is down to you at the end of the day, assuming you get the right advice and information, you need to apply and process it effectively,

We all have characteristics that hold us back and slow us down in some way, finding the right coach/ consultant for you will help deal with your personal issues as well as your business ones, a complete solution in one of the most efficient ways I know.

Think about all the advice you have received in your life from,

Parents being a child at home

Teachers at school
Lecturers at courses & classes
Speakers at seminars
Authors of books read
An expert in a field you knew little about
Writers of newspapers and magazines
Friends and family,

The list is endless imagine where you would be and what you would be doing today if you decided not to take the majority of the advice and instruction given to you and apply it to your own situation, the world is full of people who did not listen, listen enough, understand or have someone there to give them some knowledge, wisdom and guidance when they needed it most.

Ask yourself am I still learning? Or do I know it all?

Is there something I can learn from someone else?

Is the payoff worth the risk? i.e. your time and money against the potential return of personal and business growth.

If you are not sure is it worth a try?

Everything of value costs something to someone otherwise it would not be of value.

Can you afford not to invest in something or someone?

Sometimes the thing that separates those who make it and those who don’t is the decision to invest in someone’s expertise for a greater reward.

If this article strikes a chord with you, then look for someone who can help you get to the next level, find out what they can do for your specific situation. This article is generic, but when I work with businesses it will be specific that is the x-factor of working alongside someone, the solution is tailor made for your business and hence more effective.

Utilizing Buying Power Through Retail Company Financing

An establishment that understands and utilizes credit options through sales financing for their clientele makes it easy for those customers to make purchases that may have been out of reach before.

Obtaining cash through retail company financing is quick and easy, and once approved, purchases necessary for your business’ success can easily take place each and every day.

An Example of Retail Company Financing in Action

Let’s say, for example, you own a high-end jewelry store. A man comes in looking for the perfect engagement ring for his girlfriend, and excitedly finds it within one of your diamond ring displays. Unfortunately, the price of the diamond ring costs more than the amount of money the man has to offer at this time. By having the option at the jewelry shop to offer retail company financing, the prospective client can buy his sweetheart her dream ring from your store, without having to lower his desires, or your profits. Most importantly, when the individual gets approved for sales financing, he can make the purchase and take the ring home immediately.

The Benefits of Using Retail Sales Financing Companies

There are several ways in which a business can benefit from partnering with an expert and experienced funding corporation. A business can stimulate the economy, especially that of a local economy by allowing customers to make large purchases. This not only earns a business an outstanding reputation within a given community, but also allows the customer to buy exactly what they desire without having to sacrifice quality or type for immediate cost.

Chasing payments from those who choose to not pay bills completely and on time can be a hassle for retailers. Using a funding corporation guarantees that a full payment for your product will be received. This keeps profits high, stress levels low and sales people within your retail shop paid and happy. This also saves valuable hours in your business’ billing departments as well as billing supplies and expenses that would have otherwise been used.

What to Look for in Retail Sales Financing Companies

When considering a partnership with a funding corporation, there are many important details to evaluate. This includes that of valuable experience the company already has had with these type of transactions. Normally, a business that has worked in the field of providing retail company financing for several years will know the ‘ins and outs’ of what will work best for a particular establishment.

It is also important to understand the customer service process at a particular funding company. For instance:

• Will your retail business have to complete stacks of paperwork and wait weeks for a response?

• Or are there only a few pertinent forms to be completed, enabling results to come back quite quickly?

• Will your retail establishment have to take care of the billing or will the finance professionals take care of it on their end?

Also determine which types of fees (if any) will apply to sign up or to complete each transaction. Retail sales financing companies that require and pass on hefty fees can often decrease profits tremendously. Be sure to evaluate the company just as they are evaluating you for a long-lasting and beneficial relationship for both parties. Do not settle on partnering with a company if it doesn’t feel like a good fit. Instead, find a company with a long track of record of success who is willing to make the process simple and affordable for your retail establishment.

Finance Your Company and Manage Your Company Finances

Below are some websites and web applications that can help small businesses finance their company and manage their company finances. These web applications span the gamut from crowdfunding entities to peer-to-peer lending facilitators to online bill management and invoicing applications.

Finance your company

Profounder is a crowdfunding entity. It allows business owners to “Raise money for your business from your community. Get funding for equity or revenue share.” according to Profounders’s website. Profounder enables business owners to raise capital. Profounders’ site further states, “We’re making it easy for your community to contribute financially to your business, so they’re literally invested in your success.” Profounder also provides related tools to manage this capital raising process. Who can invest through Profounder? “People with whom you have a substantial, pre-existing relationship, this group may include your friends, family, and people you know in your community.”

Prosper is a peer-to-peer lending network. From Prosper’s website, “Here’s how it works: Borrowers choose a loan amount, purpose and post a loan listing. Investors review loan listings and invest in listings that meet their criteria. Once the process is complete, borrowers make fixed monthly payments and investors receive a portion of those payments directly to their Prosper account.” Prosper circumvents “the middleman to connect people who need money with those who have money to invest…so everyone prospers!”

Manage your company finances

Here are a couple of online entities that will help you manage your company finances. Both will help you automate your accounts receivables and payables.

Bill.com is an online bill management entity for small and medium businesses. Per Bill.com’s website, “Bill.com streamlines and automates vendor bill payment and customer invoicing. You get a complete web-based “financial office” to organize your day-to-day finances and optimize cash flow. Everything you, your employees, and your accountant need to manage your business – the documents, workflow, payment processing, invoicing, and collections – are available at your fingertips. Anytime. Anywhere.” Bill.com helps replace paper-based processes.

FreshBooks is an online bookkeeping and invoicing service for small businesses and independent contractors/professionals. According to Freshbooks’ website, “Bill 300K or less? FreshBooks is your accounting system. Bill more? Use our accounting integrations.” Regarding integrations with Quickbook, it appears that someone in IT at the user’s company will either have to write the integration code or sign up for additional support from Freshbooks that would include writing the code. The other option is to export the data out of Freshbooks and import into Quickbooks.

These entities help small business owners finance their companies and manage their company finances. If you already have a full-time accountant or bookkeeper on staff, or if you have an entire finance and accounting department, obviously those online entities that help you manage your finances are not aimed at you. However, if you have a new division or are considering launching a new service and wish to track everything separately, one of these entities may be just the answer. Similarly, if you only wish to raise capital of $25,000 or less, one of the above entities may be the perfect vehicle to use to do this. If you need significantly more than this, then you obviously need to look elsewhere.

Relationship Between Hotel Employee Performance and Company Finances

Several companies across the world have declared how much they value their people since they are the best asset of the business. This declaration though cannot be seen especially during these times of slow growth in strategies and the senior management teams appear to be in denial of the accuracy of the statement. While most hotels nowadays seem to focus on cutting costs and generating new business goals and strategies, fast emergence of evidence shows that there is undeniable relationship between hotel employee performance and the finances of the business.

Surveys and studies show that those companies that give importance to their workforce are able to “get it.” This means that they are capable of achieving their goals. The main reason for this is that the employees are satisfied. While most would think that an employee training will iron out some issues with the poor hotel employee performance, there are numerous instances that proved that happy personnel can provide 80% successful project implementations and productive outputs. So how is it possible to attain employee satisfaction for hotel companies?

One of the things that you have to bear in mind here is that the workforce involves the people that carry out the tasks particularly in dealing with the customers. Of course the customers that are satisfied with the service of your hotel specifically your staff are those that supply sustainable cash flow. Putting two on two together, you will see that if you have content staff members, you will also have pleased customers.

Now, once you have that in mind, you can concentrate on monitoring hotel employee performance. There are common characteristics of hotel companies that possess. First is that they have principled control. Though this does not pertain to ethics or principles per se, it is irrefutable that ethical behavior is essential to achieve a strong foundation. A company should establish long term commitment in engaging and encouraging the employees.

A hotel company with managers and higher ups that listen and respond to the employee population elicits high-quality output from their employees. Always remember that no one within the organization is closer to the clients than the employees themselves. One of the most vital things that you should remember is that a hotel company that has strong recognition and rewards system can improve the hotel employee performance. Put yourself on the shoes of your staff. You know that when you get rewards and credit from your employer, you will perform better. A well conceived program for employee incentives will definitely motivate your employees to give their best.

It is imperative that you realize that there is indeed a strong link that is present between hotel employee performance and company finances. It is up to you to grab this rare chance in gaining competitive leverage. Harness your greatest asset, which are your workforce. They are critical in differentiation particularly in today’s tough business environment. In conclusion, content employees will generate happy customers. In return, this will build long term relationship between the company and the clients, giving you an opportunity to earn more money at present and in the future