Did you know that small businesses make up 97% of all private-sector companies in the U.S.? What’s more, according to research conducted by the SBA government agency, they employ half of all employees in the entire private sector. That means that half the people in the United States who don’t work for a public agency are employed by a small business.
The challenges of small businesses affect us all. And arguably the biggest challenge of small business is raising capital.
Most small businesses can’t rely on profits to build their business, both initially and when trying to take the business to the next level. However, owners often shy away from seeking outside funding, having heard horror stories about bringing in outside investors.
You may have heard the story of how the founders of Ben and Jerry’s Homemade Ice Cream lost control of their company. There are numerous such stories of mission-driven, idealistic founders who, through the process of raising capital, lost control of their companies and saw them shed many of the things that made them great. It’s stories like these that make many small business owners hesitant to raise money.
Jenny Kassan, author of Raise Capital on Your Own Terms, says you don’t have to sell your soul to fund your small business. There are many options for raising capital that most small business owners do not consider.
Most people think about venture capitalists, angel investors and other professional investors. However, in 2012, the federal government increased the legal options to facilitate crowd funding and other individual sources. Now almost anyone is a potential investor – your family, friends, and even individuals you don’t know.
Seeking outside funding is not the right answer for every small business, but according to Kassan, these common fears should not be a reason to hold you back from raising capital.
|Who am I to ask someone to invest in my business?||My business brings value to the world. If I don’t grow my business, I won't be able to serve all the people who would benefit. The right investor(s) will see the value of that and will be excited to support me.|
|What if I lose their money?||Everyone who invests knows there is a risk. I will do whatever it takes to make the business successful. If things don’t work out, my investors will know I did the best I could.|
|I’ll be stressed all the time about whether the investors will get what I promised.||Having investors will help me stay focused. Also I’ll have a built in source of support when I need advice or resources.|
|I can't look for investors until I fix my website.||If I wait to raise money until everything in my business is perfect, I’ll never start. What if what I have now is good enough to start?|
|I don't have time for this.||Without investment, I can’t take my business where I want it to go. Raising capital is a great growth opportunity.|
If you are interested in raising capital, I recommend Raise Capital on Your Own Terms, a new book that provides a detailed guide for every step you need to take, including how to find the right investors and how to structure your agreement to protect what is most important to you.
Jenny Kassan takes you through a six-step process for creating a customized capital-raising plan: one that excites you and is in complete agreement with your business goals and your personal values. Kassan knows the landscape of investment capital, and what she is talking about goes way beyond crowdfunding. There are all kinds of investors out there, with varying motives and expectations. They’re not all looking to make a killing—many investors are mission-driven. Kassan shows you how to find them, and provides a layperson’s primer on the laws and regulations governing fundraising.