In todayís credit market turmoil it is more difficult than ever to find financing for a business and nearly impossible for a start-up.† However, if you have a good concept it is always possible to find financing even given the buyerís market conditions that we are currently experiencing. The trick for a start-up business is to find those who have as much incentive as you do to succeed. An arbitrary investor that knows nothing about you or your business will nearly always view you as a significant risk that he must evaluate against the likelihood of a real return. As a result, you find yourself spending all of your time convincing them you are credible and your concept will work. Remember, the harder it is to convince an investor that you have a good concept the more return they will want. This higher return will be costly in the form of either higher interest rates or lost ownership. Another common mistake is asking for a great deal more money than you really need and can afford by accounting for organizational and capital assets you may not need in the beginning.† Many entrepreneurs lose their businesses before they even get started by giving away too much equity and taking on too much debt. However, these mistakes can be avoided if you know where to look for others that are as motivated as you are by your business concept.

 

Friends and Family Network

The first place all new business owners should look for financing is their network of friends and family. You may be sitting there thinking, ďBut I donít know anyone with the kind of funds that I need.Ē Keep in mind that itís not just the people you know but the people they know. Letís say you have a brother, sister, spouse, a mother, father, grandparents, uncles and aunts. Just within your family you have at least a dozen people. Now add all your past co-workers and close friends. Most people easily have 50-100 direct contacts that likely want to see them succeed. Make sure they all know what you are doing and what you need to succeed. If each one of them also knows at least 50 people then that is at least 2500 individuals that may be a resource for you to tap into. One of these individuals is bound to be able to help. In addition, these contacts may be very helpful when looking for your first clients or customers. Never underestimate the power of networking.

 

Future Customers

The second place to look for help is with your future customer base. Remember that you are starting your business to meet some kind of an unmet demand.† Start looking for customers from day one even before youíve broken ground on the business. Customers that want your products or services will likely be motivated to help you in making them a reality. The stronger the need or demand for the goods or services the more they will be willing to help. Also, there is no better way to establish credit than by getting advance orders and especially if they result in advance payments. Investors love this. Itís all about eliminating investor risk. Ultimately, a great way to secure an investor is by demonstrating a low risk deal with guaranteed revenue.

 

Partnerships

Another great way to get financing is from the business to business partnerships that you inevitably form in the creation period and operation of your business. These partnerships will come from the suppliers and fellow businesses that are complimentary to yours. Your suppliers benefit directly from your success. Of all the investment sources to look for help this is one of the best places to look. The help they can provide is often overlooked. Most of your suppliers are established businesses with credit, fully staffed organizations, and have proven track records. These are all things you lack as a start-up and are the leading contributors to you not securing affordable financing from investors and over-borrowing.† So why not tap into them? If you have a great product suppliers are often willing to extend development resources that can later be amortized through the products or services that you are purchasing from them. In addition to suppliers you should seek to partner with other firms that have services or products that are complimentary to your own. They may be willing to invest in you and/or help you find future customers. Businesses are highly motivated by that next big thing that is going to grow their bottom line, so if you have that next big thing donít hesitate to reach out to your fellow business partners.†

 

How we use these hidden resources

Helping start-up companies that have electronic content in their products find hidden financing and resources is at the core of what KISMET Strategic Sourcing Partners does for our smaller clients. We act as the procurement function for these start-ups so that they can keep their focus on their growth and the marketing of their products.† Through our expertise, we are effective at finding them reliable, long-term, low cost sourcing and development solutions so that they donít have too. This partnership gives the start-up business instant access to electronic supply chain professionals that can immediately navigate through a complex industry, so the business can stay focused on what they do bestÖ selling their products to drive revenue. Depending on the product, we may even be able to help the client connect to funding sources by partnering them with other businesses within our own network. KISMET SSP itself was started with very little financing from its founders by using the same principle sources and techniques discussed in this paper. We have proven that it works and know it can work for you too. A start-up has virtually no excuses for not being able to bring the next big idea into reality.

†††††††††††† †††††††††††† †††††††††††† †††††††††††† †††††††††††† †††††††††††† †††††††††††† †††††††††††† †††††††††††† Scott Lange

Finding hidden start-up financing in a difficult credit market

LET OUR EXPERIENCE NAVIGATE YOUR COMPANY TO SUCCESS

We give customers a strong voice in a supplier dominated industry

Contact us:†† Customer_service@kismetssp.com

Scott Lange

Managing Partner & Co-founder

KISMET Strategic Sourcing Partners, LLC

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