How to Fund an LLC

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Most people that start businesses with numerous partners understand the disadvantage of going the corporation route; and with partnerships rarely accurately reflecting the type of agreement among a group of individuals intent upon starting a business, limited liability companies are often the most viable option, though starting and Funding An LLC can present many challenges.

The process of starting an LLC is relatively hassle-free, so long as you have a business name that is unique enough to be protected by copyright. You need only prepare and sign an LLC Operating agreement, craft the business’ LLC articles and submit them to the relevant authorities, and acquire the necessary licenses and permits to begin operations.

Funding an LLCj6453w4e

The amount of capital any given LLC requires to start will depend on the industry in question. You can estimate the figure by determining the cost of developing and producing your product.

The structure of limited liability companies is such that financial institutions are often hesitant to avail loans to them, especially if the creditworthiness of their members is in question.

Venture capitalists also tend to give LLCs a wide berth for similar reason, some of those most common sources of funding for limited liability companies including the following:

Personal Resources

A number of LLCs depend upon the personal assets of their members to fund their operations. Any entrepreneur seeking to start an LLC should first take into account the combined financial strength of his partners, determining the amount of money each member can afford to give up from their personal savings.

Funding in such situations doesn’t always have to be cash. Property and services can prove just as useful to an LLC’s efforts.

Loans

Personal loans are a fairly popular source of funding for LLCs. The creditworthiness of each member is an important factor here, with each member of an LLC personally liable for repaying the loan.

SBA Assistance

654yhrLimited liability companies have been known to apply for financial help from the United States Small Business Administration. Individuals and entities applying to this agency must present their business plan and other related documents that show the other sources of funding that were pursued before SBA assistance was sought.

Companies whose applications are approved can expect to receive SBA backing when applying for loans.

Venture capitalists are a credible source for funding an LLC; however, because venture capitalists rarely risk their money in situations that cannot guarantee a profit, few LLC’s can hope to utilize successfully this funding option, not unless they can show profitability before seeking funds from an investor.

How to Attract Investors to a Business

Business plan

The foundation of a startup’s success is a good team of investors because they can provide more than capital to a business. Good investors can become resources for realizing, organizing, and marketing ideas. It is important to know what to expect from an investor. Successful entrepreneurs possess the vital skills for attracting the best investors. However, attracting good investors is never a simple task, especially for startups. Investors want ideas that will change the world, and this is why it is difficult to attract them. But through preparation, research and strategy, you can attract investors and launch your business successfully. As a newbie with little or no experience, how do you convince potential investors that you are worth their time? Below is how to attract investors to a business.

1.Use communication to your advantage

We live in a world where the internet Business 05provides an opportunity to connect online and communicate in a timely manner. If you redirect people to your voicemail and emails often go unanswered, other people (including investors) will think that you do not have the time or just don’t care about responding. Investors want to know they can call you anytime and you will respond. If you are not in a position to respond immediately, then you should do that as soon as possible. Timely response to phone calls, emails, and voicemails shows that you are serious about your business.

2. Have a comprehensive and well-thought business plan

Do not just pitch how successful you think your ideas will be, you need to back up your statements with evidence in the form of research or case studies. Provide financial statements, interview reports, surveys and any other evidence that supports your claim. Information about potential competitors and your valued proposition/competitive advantage are also essential. If you cannot do it yourself, then hire a professional business consultant to craft a business plan that will attract the attention of investors, who are always interested in facts and figures or evidence-based claims.

3. Network

Business 09Attend seminars, business fairs and other networking events in your industry to connect with people and meet potential investors.

4. Put your own money in your business before seeking investors

If investors see that you have risked your money, they begin to take your business idea more seriously. If you are not willing to invest in your own idea, how do you expect others to?

5. Schedule for face-to-face meetings and perform computer presentations

Use technology to your advantage. Video or other visual presentations back up your ideas. Use them to demonstrate how your product/ service works and how it will change the world.

6. Be Honest

In business, honesty is a non-negotiable trait. If you constantly misrepresent yourself and business, you are headed for failure. Do not promise what you know you will not deliver. It will only show how incompetent you are, and investors will not want to invest in you or your business.