Partnerships, Investors & Believers
At some point your company will probably need investors or partners. Ideally you will find money available from friends or family. Friends and family are great because you know them but on the other hand you do have a personal relationship to jeopardize. Going with someone who just invests is a great option as long as you vet them. Crowdfunding is great for building hype and saving equity but you must be ready to deliver.
Money is a necessary evil in business. You need it to carry on the business but it can cause conflict when going with family or friends. Family and friends will give you money without a ton of showmanship. However anything with money is best left as a business relationship so give them the same treatment you would give business partners or investors. Money really is the fastest way to destroy a relationship and you don’t necessarily have control of the problems that will pop up.
The other side of the coin is going with a purely business partner. A business partner is different from a small investor as they tend to have a controlling interest in the company. They will be with you to make decisions whether you like it or not. You really must make sure you research your business partner as well as possible. Look at past deals they have dealt with and look for references. Fail to do this can either have you end up with a business partner on the wrong page or even worse a scammer. I had a coworker get scammed out of half a million when trying to open up a bar with a partner. It was her and husband’s life savings. Sadly the partner took the money and left them holding the bag. Her husband was devastated and she is still working well past retirement age. The moral to the story is to do your research on your partners and have a lawyer.
A good partner can actually be a great thing for a business. I doubt you will enjoy every aspect of a business but with a partner you can find someone to take care of the less fun aspects. Breweries have a slightly longer list of issues to be dealt with compared to other businesses. They include everything from legal, distribution, promotion, financial management and of course brewing. Partner with a good accountant if you hate the business side or find a wordsmith who can get people fired up more than you can.
Small investors are a good route to go to keep full control of your business. Rather than getting a partner you can go with a few small investors that give you control of the business. Business 101 is keeping as much of your business owned by you. Equity is your friend and you must do everything you can to hold on to it no matter which side of the coin you go with for investors. Buyback your company as you grow if you feel your investors want something else. Be open to opinions but make sure to keep your vision going.
Crowdfunding is an amazing way to be a business panhandler. Although you’re not really a bum panhandling, you are someone asking for money to deliver something. You really need to be ready to deliver that something when Crowdfunding. Don’t expect to build a good public image if your followers give you money and you don’t deliver. I love the idea of Crowdfunding but make sure you can deliver the final product and all rewards you are promising. Just remember the fact that people are more likely to rant about a bad experience than praise a good one. Feel free to read my other post on different Crowdfunding platforms.
In the end one or all of these funding options could be what you need. Research and planning is the only way you can tip the scales in your favor. Do your homework on each funding option and have a solid business plan in place. You are the only one who can get the business going and you are the only one who can lead it down the right path.
Disclaimer: I haven’t started a business quite yet but have great common sense and enjoy research. Feel free to share your story if you’ve had experience with any of the above funding options.
- Shared responsibility
- Helps with day to day operations.
- Generally more funding available
- Can take over aspects of the business you don’t like or don’t want to deal with.
- You have less influence over business direction.
- A bad partner can completely destroy the business.
- You can generally control more of the business.
- You get a pool of ideas and opinions without having to necessarily follow them.
- More people to deal with
- You won’t get as much help on day to day operations
- Don’t have to give away any equity.
- You get free advertising and hype.
- Not as hard to convince people to give money
- Can be downright embarrassing if you fail to deliver
- Requires a quick and concise delivery or you will piss people off
- No help with day to day operations