Prosper Newsletter: March 2008 > Entrepreneurship

You understand that the following information is educational in nature and is not intended to be legal, accounting, or tax advice. You are responsible for your own financial decisions and should consult your own legal, accounting, and tax advisors before making your financial decisions.

Finding Gold

Ways to Find Investors

So you have a great idea and a solid business plan. You have a great product line and your expenses are all tallied. You even have all your personnel hired. However, everything is at a standstill waiting for one thing—investors. When you start a business, investors can be key to your success. Investors remove the cash problem and, if desired, can add another opinion about running the business.

For some, investing has become a risky means to high profits. There are many people willing to invest in a company if it shows organization and potential. So, make sure that you have a solid business plan before you search for investors. In other words, your business plan should be as solid as applying for a bank loan. In fact, some investors may require more detail than a traditional business plan because they want to know exactly where their cash is going and how it will be used.

There are several methods of finding investors that may benefit your business. One of the first and most obvious is family; however, family members do not always make for good investors. In some cases, family members may mistakenly believe that because they contributed monetarily to the business, they are now owners of the business. Family investments can also lead to family arguments. So, if possible, avoid asking family to invest in your business unless strict roles are defined beforehand, in writing.

Venture capitalists, or angel investors, can be great investors for your company. Such investors are generally signed into a contract, so before they sign, they will usually scrutinize your business plan to ensure that you have a viable product and decent equity. When you bring in angel investors, you will want to define their roles. Will they be silent partners? Will they actively participate in the company's decisions? Make sure that you have all your questions answered before you seek out angel investors. You want investors that will best fit the needs of you and your business.

A great way to find investors is through friends and acquaintances. You can also check with business schools and talk to professors about potential investors (some investors like such schools because they feel like they produce up-and-coming businesses and products). Also, local clubs and organizations based upon your business or product are great places to find investors.

Additionally, networking is key to finding investors. Look for business lectures or symposiums that potential investors would attend. Seek out investing or business organizations. If a local business school is holding a competition, attend and see who else is in attendance. Many people find investors because they know somebody that knows somebody. Place feelers out at far as you can: ask friends, family members, and neighbors to put the word out as well.

Taxes, Refunds, and Investing

Many like to quote the adage: there are two things in life you can't escape—death and taxes. Some might say that the reason people are scared of each is fear of the unknown. One bit of advice that new entrepreneurs, business owners, and everyday taxpayers may benefit from is staying abreast of tax laws and their implications. A lack of understanding about taxes can cause a chill up the spine of even the savviest individual.

Yahoo Finance quotes several code changes that may affect returns (note that several of them are specific to taxpayers' circumstances). Some would argue it is too difficult to keep up with the latest and greatest tax codes and tax laws, so why even bother? The simple answer is this: ignorance is costly. A more complex answer might be that you really don't have to keep up with it yourself if you have someone or some company keeping up with it for you.

Many consumers look forward to tax season because of the refund they will receive, or at the least they don't owe the government an arm and a leg. There are many schools of thought about whether it is better to pay a little or not pay at all, or receive a refund.

Many entrepreneurs and individual consumers sometimes have difficulty deciding what to do with their refund. One suggestion is applying it to a business. Yes, the big screen TV looks enticing, but perhaps a long-term investment in yourself and your future is money better spent. If you are looking for a long-term investment, look no further than starting your own business. Or, if you already have a business, consider investing your refund into your business.

Whatever you do with your refund, make a plan and be prepared. You might choose to treat yourself, but make sure you do something worthwhile with the majority of any refund you have coming. Tax time comes every year, so take advantage of this time of year and make it work for you.

---

*Please see the Elective Class Catalog in your Success Center for dates, times, and class details.

---

HOME | PARTNERS | PRODUCTS | TESTIMONIALS | SUCCESS CENTER | ABOUT US | CONTACT | SITE MAP | PRIVACY POLICY | CAREERS