B.A.F.F.L.E.D. Business
Is Your Capital Stack, Stacked?
We’ve all heard the phrase, “it takes money to make money”—and it’s certainly true in regards to building a business. When starting an enterprise, you’ll need money for literally countless reasons, including registering with your state or other government entity, starting a bank account to keep professional assets and liabilities away from your personal ones (HINT!!), and launching a website so people know who you are when potential customers and clients want to learn more.
So, how do you get all this money? Well, it certainly helps if you have money saved and extra disposable income from the job(s) you’ve already been doing. It also helps if family and friends will invest in your enterprise to help you make what you believe in come to reality. But, there are other ways you should check into, too. Having your capital stack in order is essential to keeping your business moving in an upward trajectory. The capital stack is the structure of all money/”capital” invested into a company.
Over the last few years, there’s been a lot of conversation about private investment, particularly in venture capital (investing a minority stake into an early-stage, growing business), and private equity (investing a majority stake into usually a mature, profitable business). However, those steps aren’t for everyone, and they aren’t for every moment in the lifecycle of a business. There are other means for gaining capital, and you should be aware of which is best for you and your business, and at which time.
Here are some of the best means for gaining funding for your business. For more, stay tuned for a tutorial on how to make sure your capital stack is well— stacked!
Grants - grants are issuances of money with no expectation of it being paid back. They may require equity (a stake) in your business, but many often do not. Often they are tied to programming or other resources to make the money worth receiving for the grantee, and worth giving for the grantor.
Loans - loans are grants of money tied to a requirement to pay them back, most often with interest. While this can sound scary sometimes, there are instances when loans are the right move for your business. You want to be certain this is the case.
Equity Financing - this is the route of venture capital or private equity, where you are giving up a percentage of ownership in your company in exchange for money to help take it to the next level. It’s a great option, especially when it comes with a greater network and expertise to make your business thrive. Be sure it’s the right option for your business at the right time.
Hopefully, these tips are helpful in the interim. We’ll have more via a tutorial for paid subscribers, and don’t forget subscribers can also book time directly to ask more questions!
Stay tuned for more…