Start Up Funding - Lessons From Success
Start Up Funding - Lessons From Success
Another survey of 500 fastest growing U.S. companies of any kind conducted by Inc. magazine showed essentially the same general breakdown: almost 80% used personal savings, about 15% used bank loans, 13% family contributions, 12% employees or partners money, 9% came from friends, 6.3% was venture capital, 4% money mortgaged property, and less than 1% used government guaranteed loans. (None of them, you'll note used grant money. Despite that idiot on TV advertising FREE MONEY, it just isn't there except for specialized projects.)
So, how much did these successful, fast growing companies start with?
$1000 or less 13.0%
$1000-$5000 12.6%
$5000-$10,000 8.3%
$10,000-$25,000 13.3%
$25,000-$50,000 12.0%
$50,000-$100,000 15.6%
$100,000-$500,000 17.8%
$500,000-$1,000,000 2.8%
$1,000,000-$2,000,000 1.3%
$2,000,000-$5,000,000 1.3%
$5,000,000 and more 1.1%
So over a quarter of the Inc. 500 companies started with $5,000 or less, and more than half started with less than $50,000. The point is, you don’t need megabucks to start a company, not even a fast growing one.
However, a Coopers & Lybrand study found that growth companies that did receive money from outside investors typically started with three times more money and went on to produce 30% more revenue. But does that mean that if you want to make more money you should go after a bank loan to start? Not really. What you're looking at is probably more cause than effect: better grounded firms are more likely to qualify for a bank loan at start-up, and thus they're likely to make more money in the long run.
Although most company founders used their own money for start-up, of course, they probably would have preferred to use someone else’s. But the problem is most start-ups are unable to attract lenders or investors. But, as companies grow and prove their ability to generate cash flow and operate successfully, their financing options change—typically within two to three years.
If you're good at what you do, within a couple of years you'll get the money you need. The Coopers & Lybrand study, in fact, showed that on average by the 28th month in business two out of three surveyed companies were funded primarily by outside sources such as banks, venture capital, and alliances. Significantly, those companies that received funding from investors two to three years after start-up raised nearly five times more money than those receiving bank financing, and today they’re producing, on average, 30% higher revenues than their surveyed peers.
In short, the best way to be successful is to dig deep, use your own money to get started, prove the concept, and then go after money to grow.
Start Up Funding Lessons From Success - To learn more about this author, visit Kate Lister's Website.
Like this article? Share it with your friends
A study of 328 fast growing manufacturing and service companies conducted a few years ago found that most of them started without the help of outside capital. Almost three quarters of these highly successful companies, it turns out, were started with the founder’s own money perhaps with help from family and friends. Only 13% were able to attract investors, 8% used bank loans, and another 8% relied on supplier or customer alliances.
Another survey of 500 fastest growing U.S. companies of any kind conducted by Inc. magazine showed essentially the same general breakdown: almost 80% used personal savings, about 15% used bank loans, 13% family contributions, 12% employees or partners money, 9% came from friends, 6.3% was venture capital, 4% money mortgaged property, and less than 1% used government guaranteed loans. (None of them, you'll note used grant money. Despite that idiot on TV advertising FREE MONEY, it just isn't there except for specialized projects.)
So, how much did these successful, fast growing companies start with?
$1000 or less 13.0%
$1000-$5000 12.6%
$5000-$10,000 8.3%
$10,000-$25,000 13.3%
$25,000-$50,000 12.0%
$50,000-$100,000 15.6%
$100,000-$500,000 17.8%
$500,000-$1,000,000 2.8%
$1,000,000-$2,000,000 1.3%
$2,000,000-$5,000,000 1.3%
$5,000,000 and more 1.1%
So over a quarter of the Inc. 500 companies started with $5,000 or less, and more than half started with less than $50,000. The point is, you don’t need megabucks to start a company, not even a fast growing one.
However, a Coopers & Lybrand study found that growth companies that did receive money from outside investors typically started with three times more money and went on to produce 30% more revenue. But does that mean that if you want to make more money you should go after a bank loan to start? Not really. What you're looking at is probably more cause than effect: better grounded firms are more likely to qualify for a bank loan at start-up, and thus they're likely to make more money in the long run.
Although most company founders used their own money for start-up, of course, they probably would have preferred to use someone else’s. But the problem is most start-ups are unable to attract lenders or investors. But, as companies grow and prove their ability to generate cash flow and operate successfully, their financing options change—typically within two to three years.
If you're good at what you do, within a couple of years you'll get the money you need. The Coopers & Lybrand study, in fact, showed that on average by the 28th month in business two out of three surveyed companies were funded primarily by outside sources such as banks, venture capital, and alliances. Significantly, those companies that received funding from investors two to three years after start-up raised nearly five times more money than those receiving bank financing, and today they’re producing, on average, 30% higher revenues than their surveyed peers.
In short, the best way to be successful is to dig deep, use your own money to get started, prove the concept, and then go after money to grow.
Start Up Funding Lessons From Success - To learn more about this author, visit Kate Lister's Website.
Like this article? Share it with your friends
 | |
 |
excellent
Commented on Start Up Funding Lessons From Success. |
| |
Leave Your Feedback |
 | |
| |||
Staging DivaDebra Gould, aka The Staging Diva®, is President of Six Elements Inc., an internationally recognized home staging company. Inspired by many requests from aspiring home stagers wanting to start similar businesses, Gould created the Staging Diva Home Staging Business Training Program. Gould has trained over 1000 Staging Diva Graduates worldwide to start staging businesses. Buying decorating and selling six of her own homes in four years lead to an interest in real estate staging which she turned into a career with the launch of sixelements.com in 2002. Since then she has staged hundreds of homes in addition to teaching home staging training. Gould is the author of several home staging resources including a series of popular ebooks made up of a Design Guide, Color Guide and Portfolio Guide. For more information about Debra Gould visit stagingdiva.com. - Visit Staging Diva's Website |
|||
Linda RichardsonLinda Richardson is the Founder and Executive Chairwoman of Richardson, a global sales training and performance improvement company. As a recognized leader in the industry, she has won the coveted Stevie Award for Lifetime Achievement in Sales Excellence and she was identified by Training Industry, Inc. as one of the “Top 20 Most Influential Training Professionals.” Ms. Richardson is credited with the movement to Consultative Selling and is the author of ten books on selling and sales management, including Sales Coaching — Making the Great Leap from Sales Manager to Sales Coach, and Stop Telling, Start Selling. She teaches sales and management at the Wharton Graduate School of the University of Pennsylvania and the Wharton Executive Development Center. Linda is a frequent speaker at industry and client conferences, has been published extensively in industry and training journals, and has been featured in numerous publications, including The Wall Street Journal, Forbes, Nation’s Business, Selling Power, Success, and The Conference Board Magazine. Learn more about Richardson's sales training and performance improvement solutions at http://www.richardson.com web - Visit Linda Richardson's Website |
|||
Dianne CramptonDianne Crampton is an executive leadership coach, team culture consultant, author and president of TIGERS Success Series, Inc. Dianne has been helping CEO's and Executives connect their employees to their core values and goals for over 20 years using the trademarked TIGERS team culture process, which stands for trust, interdependence, genuineness, empathy, risk and success. To download a free white paper on behaviors that build strong teams and behaviors that will predictably tear them down go here. Dianne's contribution to the 2010 Pfeiffer Consulting Journal (an imprint of John Wiley and Sons Publishers) entitled TIGERS Hearted Teams is available in November 2009. Her new book TIGERS Among Us: 5 Winning Business Team Cultures And Why, Three Creeks Publishing will release in March 2010. To receive publishing discounts, subscribe to the free TigerTracks Newsletter here. - Visit Dianne Crampton's Website |
|||
Joe DagerJoe Dager is President of Business901, a progressive coaching company providing no-nonsense direction in areas such as Lean Six Sigma Marketing and organized referral marketing. What others say: In the past 20 years, Joe and I have collaborated on many difficult issues. Joe’s ability to combine his expertise with “out of the box” thinking is unsurpassed. He has always delivered quickly, cost effectively and with ingenuity. A brilliant mind that is always a pleasure to work with.” - James R. If you want to learn more about Business901, start a conversation with us. We can be found @ Web/Blog: Business901.com Web/Blog: FundingYourNonprofit.com LinkedIn Profile Follow me on Twitter - Visit Joe Dager's Website |
|||
Jeff FosterWebBizIdeas.com is a Minneapolis website design company founded to help people start an internet business by providing them with website, business, and internet resources that help foster the growth of successful online businesses and develop innovative Internet business ideas. We specialize in internet consulting & internet marketing. - Visit Jeff Foster's Website |
|||
Stephanie RobeyStephanie Robey is President and CoFounder of Pivot Positive, LLC - an Internet marketing business focused on helping people start work at home ventures. Previously, she was employed at The Search Agency with over 20 years experience in graphic design and 10 years experience in online marketing. She was responsible for launching the Conversion Path Optimization (CPO) unit where she and her team have conducted hundreds of optimization tests for online companies across multiple verticals. She is a successful entrepreneur having started and sold 2 companies and remains on the board of directors of the third, PhotoSpin.com Stephanie began her career in the direct marketing realm creating and producing direct mail for many of the major cable television companies and directly attributes her understanding of Internet marketing to those early offline experiences. Stephanie is a graduate of San Diego State University with a BFA in Graphic Arts and also holds an Executive MBA from the Graziadio School of Business and Management at Pepperdine University. Read Steph's Blog Meet Steph and Dave Sign up for our Free 7-Day BootCamp: Self Employed & Rich - Visit Stephanie Robey's Website |
|||
Leanne Hoagland-SmithAre your sales where you want them to be? Will you be one of the few who achieves sales or business success or one of the many who have failed to change? Are you tired of being told you are like everyone else? Then you may find my first book on sales of interest. Be the Red Jacket in the Sea of Gray Suits, The Keys to Unlocking Sales available at Amazon or at http://www.processspecialist.com/red-jacket.htm. This book is a reflection of my no-nonsense approach to improving sales to overall business results. If you are truly committed to making sustainable changes, then I can help you secure a positive return on your investment because I focus on executable solutions not telling you the problems you already know you have. From training to corporate (group) coaching to executive one on one coaching, my approach is to assess, create awareness, build a goal driven action plan and then execute. The bottom line question is "Not do you or your employees know it, but do you or they want to do it?" Please call for a free strategy session at 219.759.5601. - Visit Leanne Hoagland-Smith's Website |
|||
|
To learn more about the Evan Elite Author Program please contact us. | |||
 | |
|  |
Subscribe to Kate's articles
 | |
|
|  |
 | |
|
| |
 | |||||||
|
 | ||
|
||
 |
||
 |
||
|
| ||
 |
| Have you written articles that would be of value to entrepreneurs? Become an expert on our site by publishing them! Expose yourself to a wide audience, drive more traffic to your website and get more sales! Click Here for details. |
|
|
 |
| Modeling the Masters: Learn the true secrets behind Walt Disney's business success factors & grow your company! Video produced by Phanta Media |
|
|
 |
"Learn straight from Evan how you can Make a Full Time Income (And More) from a Website"
Click Here To Learn More |
|
|
|
|
Get advice & tips from famous business owners, new articles by entrepreneur experts, my latest website updates, & special sneak peaks at what's to come!
|
|
|
 Dismiss a Franchise Workplace Culture Franchise & Distribution How to Get a Life Emotional Intelligence |
|
 | ||
 |
Top 50 Productivity Blogs
Top Blogs To Watch In 2009 | |
 |
Top 50 Social Media Blogs
Top 50 Social Media Blogs | |
| ||
 | ||||
| ||||
|
| ||||
| ||||
|
|
|
|
|
|||||||||
|
Email us your ideas on how to make our website more valuable! Thank you Sharon from Toronto Salsa Lessons / Classes for your suggestions to make the newsletter look like the website and profile younger entrepreneurs like Jennifer Lopez and Sean Combs!
|
|
|
| ||||||||||
|
| ||||||||||
|
|
||||||||||