Money for Starting a Business - Family and Friends Equity Stake

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The vast majority of new businesses are self-funded, but the second most common financing method is through friends and family. Typically, those closest to you are the most likely to believe in you and your startup idea, they know your capabilities, and they want to see you succeed. However, money issues have a tendency to cause rifts in even the closest relationships, so it is critical that you plan ahead and handle all friends and family deals as professionally as possible.

There are basically two options for securing friends and family financing - loans or equity stakes. Loans are basic - your friends or family front the money for your startup and you (the business) pays them back over time at a reasonable interest rate. Equity stakes provide the investor with a permanent piece of the company. They do not necessarily get back their original investment within a set time period, but they are entitled to a set share of the profits through the life of the business.

Most family & friends equity stake investments stem from a mutual admiration - they will risk their the money for startup because they are confident that you will succeed, you are willing to give up a portion of profits because you are happy to share with these particular folks. However, without a detailed plan in place, these relationships can devolve very quickly into anger and resentment and can be devastating to both your personal and professional success.

The trick to handling equity stake investments from those close to you is to clearly define what it means for each party. The investor must understand that they are putting their cash at risk. If the business fails, repayment is not an option (if they want a guaranteed repayment, it is a loan, not an equity stake). The amount of return they receive will depend on the agreed upon portion of ownership and the overall profitability of the company.

Think through exactly how much ownership you are willing to trade for the capital your family & friends will provide. In most cases, you will want to at least keep a 51% stake so you have ultimate control of the venture. But giving away nearly half the profits before you even start is not always the best idea, either. Do not let desperation to secure the cash push you into an unfair situation - if it is your idea, your work, and your time that are going to make the business successful, the value of the initial investment may be far less than it seems when you just really, really need the cash.

It is essential to work through all of the details with your equity investor before the deal is made. Will they have any decision-making power? When will they receive distributions for their share of the profits? How will those distributions be calculated? What if the business fails? What if it succeeds beyond your wildest expectations? Talk through every possibility and make it clear that business is business - investment in your startup should not be an emotional issue.

Money and relationships can be a difficult mix. The excitement of going out on your own should not cause personal problems with those closest to you. All the potential resentments and falling out can be avoided, however, by simply putting in the time and effort to handle the equity stake agreement as professionally as possible. Dealt with correctly from the start, creating financial partnerships with friends and family can be a win-win situation for everyone involved.

-K. MacKillop, a serial entrepreneur, is founder of LaunchX and authors a small business startup blog. The LaunchX System is designed to help entrepreneurs start a business based on their own idea. It includes step-by-step business startup instructions, key software, business tools, and more -- a complete business kit. Visit LaunchX.com to learn more about this revolutionary way to become an entrepreneur.

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Business Start-Up - The Finances

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When you're just starting, how to run a cleaning business is not as much of a concern to you nor are cleaning business opportunities. What matters is actually your capital investment. The house cleaning business, especially if you start out as with residential cleaning services doesn't really require much capital as compared to if you're going to offer commercial services. However, the point still remains that no matter how small it may be, but you will still need a capital investment for your business.

Now when it comes to the financing of your business, there are actually two types of financing: equity financing and debt financing.

Debt Financing
Debt financing is the most common type of financing when it comes to starting a new business. This kind of financing involves you, the owner, to borrow money, which includes loans, a lease, a line of credit, and the likes. This is the kind of debt wherein you pay interest in order to finance the original amount that you borrowed. You can avail of this kind of financing through banks, credit unions, lending companies, credit card companies, even suppliers, and so on.

Debt financing includes you and the money lender having an agreement on the terms of payment - how much to pay every due date, and every when is your due date. In order to avail of this, the financial institution first asks to see your house cleaning business plan, and basing everything on that, they will decide if you are a good investment for them or not. Thus, debt financing means applying for a loan - but not all loans are approved; only the bankable ones.

Equity Financing
Equity financing, on the other hand, doesn't entail you to borrow money. Instead, that portion of the business' capital is provided by a partner or a stockholder of the business. Having a partner takes care of the portion of the capital, and also opens more cleaning business opportunities with that person's skills, area of expertise, and pool of prospective clients. So it is not only the finance that a partner helps you out with, it is also with other aspects on how to run a cleaning business.

A cleaning business is simply like any other businesses out there. It needs your care, it needs your attention, and it needs your support. So treat it as you would treat a child that you value and love so much. For certain, that kind of dedication would make your business grow and rise to success. But remember, never ever stain your business' name or credibility - pay well.

Janice is an expert in cleaning services. Her experiences have given her insights to share to those who want to get into the business of servicing people's houses and establishments. She believes that everyone deserves to learn, and it is up to the person to exert the efforts to make it work. Know more about Janice and her work at http://www.cleaningbusinessstarterkit.com

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Retail Financing - Getting The Funding That You Need For Your Business

Opening a retail business can be tricky if you don't know how to do things the right way. Putting up one is different from maintaining it. Starting a business poses a lot of risks because whatever plan you make in getting profits, you will still never know what will happen until you start it. A lot of businesses and entrepreneurs have experienced bankruptcy and losses because of the expenditures that have not been anticipated. Retail financing is the answer to your problems.

Setting up a business can be easy compared to continuing its operation. I have seen and heard many stories about businesses being put up successfully but have failed to maintain its existence. Some reasons behind this are expenses from damages due to natural and man-made causes. Another reason could be due to poor marketing of the products or services and other business were not just managed properly.

You can still save your business before it is too late. If you want to realize your business or if you just badly need funding then, you can opt for retail financing.

Sometimes, the clients do not pay on time and yet the company or the business badly needs financing in order to continue its operation. From buying the materials needed to paying the costs of operations, retail financing can answer it.

These financing companies offer a lot of options for you to choose from. This makes it much easier because you can choose the option that best suits your business.

Bank loans are very time consuming before your application can be approved. You also need to comply with a lot of papers and documents before your application can be processed; who knows you might even be rejected and just wasting your time.

Unsecured business lines of credit is a good way for the badly needed funding. This type of financing doesn't go through a lot of tedious paper works and weeks of waiting for the approval. Processing takes only a couple of days.

Through unsecured business lines of credit, you don't have to put something as collateral to the money that you borrowed. It is easy to obtain compared to banks but the only downside of this funding is that their interest rates are a bit higher.

A lot of businesses have chosen unsecured business lines of credit to cater their financial needs because there is a higher chance for them to be approved compared to banks. Just don't forget to have a good credit score or credit history because these companies will surely be looking at them.

If you are in dire need of financial support you can go for retail financing or unsecured business lines of credit. It saves you time and takes away the hassle of processing documents. A lot of companies offer them today, just make sure to choose the right one that can give you the best deal.

Having access to [http://www.principiscapital.com/unsecured-business-line-of-credit.aspx]unsecured business lines of credit like for [http://www.principiscapital.com/retail-financing.aspx]retail financing purposes is ideal for any type of business. For the best packages, check out Principis Capital today.

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