“Private Investors For Startup Small Business Wanted” – Think This Ad Has a Chance in This Economy?
If you are thinking of finding private investors for your startup of a small business, the current recession will make your efforts more difficult. Many private investors are very wary of investing in new businesses, but there are ways if you have a solid business plan, good credit and find the right investor.
There are many stories of great wealth that was created during hard financial times. The bad economy has, understandably, greatly reduced the number of people launching new businesses. There are people that are still willing to invest in small business start ups because the potential return on their investment can be significantly higher than what a risky stock market can produce.
The kind of private investor that will be willing to lend money during a recession is will probably require that the business plan be nearly bullet proof. Placing an ad like the title to this article is likely to not be very successful. A small business entrepreneur looking for private investors will need to seek out the investor rather than just hoping that they will respond to an ad.
There are many ways to find investors and the type of business that is being started will limit the possibilities. One of the best places to go for a business loan would be to a small commercial bank. Oftentimes, small commercial lenders have more wiggle room in lending requirements than larger regional or national banks have. Getting a loan from a bank, however, will require significant assets pledged as security for the loan. Small banks will often require that the borrower give a personal guarantee which will increase the financial exposure for the business owner.
There are also lending clubs that can be found that pool the resources of numerous private investors to provide loans to small business owners. These lending clubs can be found on the internet or through referrals from other business owners or business investment firms.
There are also venture capital firms and angel investors that will invest in small business start ups, but these investors will want to be involved or at least monitor the start up of the business to make sure that their investment is safe. The cost of these types of loans can often be high, but the right investors will often be a huge asset as their desire to protect their investment may also increase the business’ chance for success. Angel investors and venture capitalists are often not shy in offering advice if it will protect their investment.
One of the best ways to get a private investor for a small business start up is to find an investor that will be willing to be a partner. This partner can be a silent partner or can be involved in the business, but such an agreement should be put together by an attorney so that the business owner can have a buyout option once the business is successful. Giving up equity in a business start up is often difficult for a budding entrepreneur, but it may be the easiest way to find money to get a new business up and running.
Placing an ad that says “Private Investors For Startup Small Business Wanted” is not likely to be that effective in a difficult economy. Once a solid business plan has been completed, the future business owner should plan to spend a fair amount of time seeking out investors for the new business. Selling the plan to the future investor may be the most difficult part of starting the business, but the efforts will hopefully pay off and result in a post recession boom for the business owner and the investor.