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Business Unplugged™
This blog features Carol Roth's tough love on business and entrepreneurship, as well as insights from Carol's community of contributors.

Want Funding? Don’t Make These Common Mistakes (Part 2)

Written By: Catherine Morgan | 1 Comment

Getting funding from people you know has its own perils. For example, having to sit with your investors and answer all sorts of business questions during a holiday meal.

Carol shares her insider’s tips on the Bank of America Small Business Community in the second article in the series, “Small Business Guide to Raising Capital, Part 2:  How Much is Family Worth to You?” Carol begins:

This is the second article of a three-part series on capital-raising mistakes you can easily avoid.  If you missed the first post, can check it out here.

 Mistake #5: Underestimating How Much Time it Takes to Raise Capital

Almost everything in business, particularly those things outside of your control, takes more time than you expect.  Raising capital is one of those things.  This is especially the case when raising money from individual investors.  Even when people tell you they are going to invest in your business, it is difficult to get them to write the check.  Getting people to part with their money is like trying to get food away from me when I am hungry; a tough task!

People will wait as long as possible to part with their “Benjamins.”  Just ask the federal government what percentage of tax returns get sent in at the last possible moment (on or around April 15th) and how many taxpayers file for an extension.  You may have to pry that investment check out of your investors’ hands.

Even with loans, documents need to be put together, processed, reviewed, put through bureaucratic processes and ultimately signed.  This takes time and lots of it.

How to avoid this mistake:

  • Take whatever timeframe you think is needed to raise capital and increase it by 50 to 100 percent. If you have budgeted six months, it will probably take nine to twelve months (and if you are thinking one month, wake up, because you are dreaming).

Mistake #6: Assuming Your Business is Fundable by Sophisticated Investors

Most business models aren’t big enough to attract the attention of sophisticated investors like angels or venture capitalists. 

You can read the rest of the post here.

Article written by
Catherine Morgan is the editor of Business Unplugged ™, an engaging speaker, and the founder of Point A to Point B Transitions Inc., a virtual provider of coaching services to individuals who are in business or career transition. Catherine is the author of the eBook Re-Launch You: Discovering Your Point B and Embracing Possibility. An experienced independent consultant and former employee of three of the former Big Five consulting firms, Catherine combines strategy development with accountability coaching. Her productivity tips and career transition advice have been featured on WGN AM 720 and WIND AM 560 The Answer in Chicago, and on WCHE AM 1520 in the Philadelphia area. Catherine speaks frequently on topics related to productivity, career transition, small business, and entrepreneurship. She doesn’t take herself seriously, but takes her subject matter very seriously.
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