Small Business Venture Capital Strategies

When launching a new small business, often the entrepreneur will consider venture capital as a source of funding. Here are 3 tips to ensure that venture capital funding can be secured when sending out your business plan:

  1. Send your business plan to the right people
  2. Venture capitalists tend to specialize in certain kinds of businesses. Some will specialize by industry, only investing in new energy companies, for instance, while others look for a certain size of company to invest in. It is worth doing the research to determine who the venture capital backers are for your industry, before you start sending out your business plan. Venture capitalists who are not specific to your industry can provide recommendations to make your plan more appealing to other venture capitalists. However, it would naturally be a mistake to send your plan to potential investors who will not even consider it.

  3. Make sure your business has the potential to be profitable enough
  4. Most venture capitalists look for a return of about 5-10 times their initial investment. For example, an investment in a company of $2 million should yield a return of $14-20 million after about five years. To satisfy these requirements, it is generally necessary to have a business which has the potential for a high rate of return on the amount invested. If the rate of return can reasonably be expected to be lower, such as for a clothing retailer, then it is probably better to look for an alternate source of funding, such as an investment or commercial bank.

  5. Remember to include an exit strategy for your investor
  6. Venture capitalists generally do not want to be involved with a new venture for an indefinite period of time. Most will plan to leave the new venture after about five years, so you should offer a clear explanation of how this may be achieved. There can be a variety of reasons for this; some venture capital managers require that the holdings periodically be sold off to acquire other offerings. Nonetheless, by demonstrating that you understand the limited time frame for many venture capitalists, you automatically make your plan more appealing than those which do not.

In summary, by sending your business plan to the right people, by recognizing what rate of return is necessary for venture capitalist involvement, and by including an exit strategy, you can improve your odds of securing venture capital funding for a new and growing business.

Join Small Business Associations

Small business associations are similar to trade associations. But rather than focusing on a specific industry, a small business association focuses on small companies in general. What this means is that entrepreneurs have somewhere to go for a resource which is very helpful when things get rough.

One thing that many business owners struggle with is whether to join a business related association or trade association. As an entrepreneur the first thing you have to realize is that a trade association is not better than a small business association nor is a business association better than a trade association. Both of these associations are beneficial to small companies, the difference is that one focuses on the industry specifics and the other focuses on the business aspect as a whole.

One of the best reasons to join an association is that the association will provide you with programs that are designed to help your business. These programs can help your business grow, but they can also help make your business more professional. The majority of these programs offer key speakers that will speak about specific topics related to all kinds of entrepreneurial issues.

A trade association is beneficial because they provide special programs that are offered throughout the year that focus on your industry specifically. These programs can be structured to help your business grow, but they can also help you improve your internal processes. Trade associations will also provide speakers each month that speak about your industry directly and often times indirectly.

Another great benefit about joining both a trade association and a small business association is that they often have different types of expos. A small business association will put on an expo that encompasses everything that you need to know about running a company, such as different software vendors, cash register vendors or anything else that you need to run a small biz.

A trade expo is going to be a lot more focused on your profession. Trade expos also allow the members to participate and show off their products. These trade expos can be used to expand your knowledge in your industry, but also gain insight into what your competitors are doing and find out what is new in your market.

Majority of associations also put out a monthly newsletter. What is included in the newsletter will vary depending on if it is a trade association or a small business association. Many times the newsletter will provide you with new information about what is going on with the association, such as what you can do to improve your bookkeeping for example.

By becoming a member of a small business association or a trade association, you will be able to create an ever growing network with other people who share your interests. By creating a network you will meet some of the most valuable people to help your business grow and these same people will often help you expand your knowledge.

So joining small business associations can definitely be a good idea to further expand your business and yourself as an entrepreneur.

Best Small Business Insurance Info: How to Find and Choose the Best Insurance Solution for You

Are you a small business owner? No matter what kind of company you run, you’ll need general liability insurance and maybe some additional coverage depending on the industry you’re involved in. How do you know how and where to apply for the best small business insurance policy?

Read reviews on various insurance companies by other businesses in your industry to learn which ones offer quality solutions. Consider whether or not you want an insurance representative or broker to help you find the right coverages. If you decide to work with a specialist, ask what kind of information he or she will need in order to determine your specific needs. Have all of the documents and information prepared. Small business owners typically need to provide details such as physical location, number of employees (if any), total payroll size, business assets, gross annual sales (if there are any to report), and so forth.

Even if you decide to apply for insurance on your own without the help of a broker, you’ll still need to have this information ready.

Best Small Business Insurance as an Investment

Think of commercial insurance as an investment. It will cost money, but it will protect your business from unexpected expenses such as lawsuits and worker’s compensation. The best small business insurance will also protect you from industry-specific problems. For instance, if you are involved in web design, you don’t want to risk financial losses associated with technological glitches, miscommunication, etc. If you are a small beauty salon owner or barber, you don’t want to risk equipment malfunctioning, allergic reactions to certain chemicals, or someone tripping and falling on your property.

No business, no matter how small, is 100% immune to possible lawsuits. People will sue over literally everything these days, and only the best small business insurance will protect your assets. If you want to stay in business for a long time, and hope for the ability to expand it someday, then you should be prepared to handle any kind of accident. It will be very difficult to survive if you suddenly owe a lot of money in compensation, or find yourself dealing with damage caused to your place of business due to extreme weather. The only real solution is to have good insurance from a reliable company that has a lot of positive reviews.

So, where can you get the best small business insurance online? Check with Hiscox Inc. to see what they have to offer for business owners in your industry. You can either get a quote through the website or call and speak to a licensed agent.