Need Money for Business? Raise Capital with a Business Partnership

Partnerships can be sticky sometimes, but they can also be a big help for your business.

When you find that you need funding either to start a new business or continue operating a young business there are a few options.

You can take the high road and use your credit cards – preferably a short-term solution. You can refinance an existing mortgage if possible. You can go to a bank or family members for loans. You can also look for special loans and grants available to small businesses.

A good place to start looking for that information is www.sba.gov. There is information about SBA loans and many links to other financing options that you can investigate. I would advise using caution before you do anything, however. Make sure you know exactly whom you are dealing with.

Another way to grow your business is to try to find someone else in a complementary business that might be interested in collaborating with you for mutual benefit. What does that mean?

Well, for instance, a friend of mine has a business on a website that is best viewed on a high bandwidth connection. The high bandwidth connections (DSL and cable) are relatively new but growing rapidly. The cable companies are anxious to sell these high-speed connections to the public. My friend needs money to get his website up and going. Instead of going to traditional venture capitalists in this very tight money market, he has chosen to find partners who already have the technology he needs, namely cable companies. His site someday will be of benefit to their customers so it seems to make good sense for a cable company to pay to help now.

There is a great deal of work involved in these negotiations. In order to start the process you need to do research to find just the right companies to interest in partnering with you. Make phone calls to find the right person to speak with, and make sure the person is a decision-maker or the process will take longer!

Then you need to write a brief proposal to introduce your product or company to them. Tell them who you are, your history with the company or product and what you do. Then say what you do or your product does that is better than what’s already in the market, why you want to work with the company and most important, what you or your product can do for their company. As in the case of product licensing, you must show a true benefit to the company in order to be considered.

Many strategic alliances (partnerships) start out this way. You have something they need and they have the money you need. Sometimes when investing money in you or your product, the new company will want to have a hand in running your business.

Before you take this route have a clear idea of how you would proceed should this company actually become your partner. If you really don’t want to have other people involved in your business, then the more traditional financing methods might be the better option for you!

Article – Copyright 2000 Stanley I. Mason. Syndicated by ParadigmTSA

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