Grab your FREE copy of the 60 Low & No Cost PR & Marketing Strategies eBook*



*By submitting your email, you will receive the eBook & also sign-up for Carol’s newsletter
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.

Written By: Catherine Morgan | No Comments

Carol shares her insider’s scoop on the do’s and don’ts of raising capital in the first article of the series, “Small Business Guide to Raising Capital, Part 1: Don’t be Greedy,” on the Bank of America Small Business Community. Carol begins:

Raising capital for businesses is hard and often misunderstood.  As a “recovering” investment banker, I have helped my clients raise 10-figures in capital over the past 15 years, and have witnessed many individuals who failed to present a compelling, fundable story about their businesses (and themselves).

In my unscientific but thorough poll of entrepreneurs, 99% rank raising capital amongst their five least favorite business activities. Hopefully, I can help make sense of the capital-raising process to make it more tolerable – and valuable – for you.

To start this three-part series on raising capital, I’ll focus on the key mistakes you must avoid to save time, money and energy while increasing your chances of success when raising money for your business.

Mistake #1: Putting all Your Eggs in One Basket

The very first capital raising mistake relates to not raising outside capital at all.  Statistics show that the typical start-up business in the U.S. is self-funded from the entrepreneur’s own savings and supplemented with some personal credit card debt.  However, part of balancing risks and rewards is using diversification.

It is important for you as an entrepreneur to show your commitment to your business by investing some of your own capital.  This is a safeguard to ensure that you are incentivized to do everything you can to make the business successful.  However, if you are putting every last dime into your business, all of your eggs will be in that one darn basket.

How to avoid this mistake:

  • Don’t bet the farm on your business.
  • If you don’t have enough money to live on and invest in your business, then: (I) wait until you have more money saved, (II) see if you can revise your budget or (III) consider taking outside capital.

Mistake #2: Undercapitalizing Your Business

A large percentage of businesses close because they don’t have enough money to survive the rocky first couple of years of business.

I have found that early-stage and new business owners underestimate the cost of starting and running the business virtually every time (usually by a factor of 3).

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.