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Paul Wimer |
Where do you go for financing for your small business? This is a question many entrepreneurs ask. Start with your own bank account and clearly define how much of your savings you will dedicate to your new venture. Compare that amount to the funds that your business plan indicates you need to get to cash flow positive, or to a clear inflection point in your businesses progress where you feel you would be able to raise money at a higher valuation for your business.
With this information in hand you are now ready to assess sources of capital - should you look to borrow or raise equity? Borrowing will be easier if your business generates positive cash flows early in its life cycle. If you are building software, or a new gadget, and anticipate many months or years before you are ready to sell product, then you are a candidate for raising equity.
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