How to fund a small business and when to launch it

Many think small business owners come out of the gate with money in hand and account payables ready to bill invoices.

d.light ! by Steve Jurvetson on Flickr

d.light ! by Steve Jurvetson on Flickr

For most small businesses, this is not the case.  For the prudent, conservative entrepreneur, launching a small business takes some considerable time.  So for those of you who are considering this, let me give you a few hints.  The classic “out of the garage” story of Apple computers or social media giant Facebook is more of the outlier then the norm. Most small business are birthed from a divisional break off from sales or consulting.  Small business owners usually have an expertise in the area of business in which they have work for several years. In fact, most small business owners will be in that profession for close to ten years before branching out on their own.

So how do they do it and where do they get the money?

If, for example, a person provides a service to clients that are specific and unique of that provider, there is an opportunity for a small business.

Many small business start by providing their product or service to a select few or high paying clients which are first to test the business model.  Being able to measure the demand for a service or product will go a long way in knowing if the business model will be able to scale.

If this can be done as a part time venture that does not compromise your day job, it would be ideal.  Having a source of income during the trial period of this new venture will allow you to make financial mistakes, which are inherited to small businesses. Once cash flow is produced and a trail client base is established, it is important to keep cost low and fixed.  In today’s virtual world this is more achievable than in the past.   Most small business can only get funding via an SBA loan, but others choose to self-fund their ventures with debt from personal credit cards, which are essentially unsecured loans. This has it own limits due to FICO scores and available money in credit lines.  Still, it remains a main source of funding for small business owners even today.

The most exciting prospects are the social funding websites or crowd funding.  INC magazine just did a review of the top 22 crowd sourcing websites for small business ventures.  We all have heard of Kickstarter, but for some this will not be doable based on the sector of the venture.  Others may choose Fundable, Earlyshares, Seedinvest, etc.  I believe these crowd funders will eventually change the public and private market going forward.

In the end, ideas and being able to produce them will always be in demand.  Working with an advisor who understand entrepreneurs will be a hugh asset in navigating the pitfalls and financial changes one faces in starting and growing a business.

The Brogan Group is a registered investment advisor which specializes in investment management for individuals and other financial intermediaries.

We believe in empowering our clients through financial education.  We educate our clients around budgeting for families and cash flow management for small companies.

We serve the full spectrum of clients in portfolio management and risk assessment to different asset classes.  We specialize in Behavioral Finance and use this as our core approach.  Allowing us to have a 360 degree approach money management

We are not your average financial advisors. We have produced a proprietary way or changing clients behavioral when it comes to money management and investing.

Our Money Memory System is our core product for clients looking to move to a great awareness their financial lives.  This with our custom client approach allows greater outcomes in reaching our clients set goals.

We are a fee based advisory who believes in our fiduciary role in putting our clients first.

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