ArticlesReader.com Menu
Newest Articles
Most Viewed Articles
ArticlesReader.com RSS
Submit Article
Login
Signup
Search the articles

Articles Main Categories
Advice
Animals
Automobiles
Business
Career
Communications
Computer Programming
Computers
Entertainment
Environment
Family
Fashion
Finance
Food
Health & Medical
Home & Garden
Humor
Internet Business
Internet Marketing
Legal
Leisure & Recreation
Marketing
Other
Politics
Reference & Education
Religion
Self Improvement
Sports
Technology & Science
Travel
Writing
Subscribe
Receive alert message from us when new articles submitted to our site for free.

Enter your name

Enter your email

Syndicate

















Related Products
Home::Small Business

Forming a Corporation – Investors

Author : SD Lawyer
YouÂ’ve come up with the best idea since sliced bread, figured out a business name and formed a corporation. There is, however, one small problem. You need money. Welcome to the world of investing.



Business Funds



Unless Bill Gates is your friend, money is going to be a problem for every new business. Even the might Google had to hunt for cash with one of the founders of Sun Microsystems finally kicking down a much needed $100,000. Whether you decide to pimp your business plan to anyone breathing or beg your step-mother for funds, here are some issues to consider.



Investors are looking for the best deal, to wit, the most stock possible in an entity. If you are asking them for cash, they have the leverage. DonÂ’t be so desperate that you give away the farm. All to often, I speak with individuals who started a business on a whim and have become disillusioned because they have lost equity in the business.



Assume I start a corporation and need funds. My neighbor agrees to kick in $20,000 for 20% of the stock. Things go great, but four months later I need another $50,000 for inventory and cash flow. My aunt agrees to kick in $50,000 for another 20% of the stock. Yikes, I am not even through the first year and I have given up 40% of the equity!



What happens in year two when I need a $100,000? I give up more stock and suddenly own less than 50% of the business. Inevitably, this leads to feelings of resentment and bitterness. “It was my idea, but now these blood suckers are going to get most of the money and they aren’t even working on the business.” This sentiment is so common that it would be laughable if it weren’t so depressing.



As a general rule, you should only sell ownership in a business as an absolute last resort. Instead, try to get loans from investors, banks, home equity lines and even credit cards.



If you must sell stock to raise funds, be very careful when valuing the stock. You should place a value on each share as though the company was already a raging success, not just starting out. Further, make sure you sell only small allotments of stock such as three to five percent. If you owned IBM, how much of the ownership would you sell for $20,000?



In Closing



When starting a corporation, guard equity as though it is the Holy Grail. If you donÂ’t, you risk becoming a disillusioned shareholder down the road.


Article Source: http://www.articledashboard.com





Richard A. Chapo is a San Diego business lawyer with www.sandiegobusinesslawfirm.com - a San Diego business law firm in San Diego, California.





Spam emails More free articles

Related articles


  1. How to Create an Employee Manual
  2. Become The Squeaky Wheel and Watch Your Business Skyrocket!
  3. Keeping a Partnership ALIVE and THRIVING
  4. Finding the PERFECT Alliance Partner
  5. Who Makes the BEST Alliance
  6. A Small Business Consultant Can Help in Many Ways... But One Thing He Can’t Provide
  7. Advertising - For Small Businesses (Part 2)
  8. Advertising - For Small Businesses (Part 1)
  9. When to Say NO!
  10. Chamber Membership will BOOST your Business
  11. What are the COSTS Associated with joining Leads Groups?
  12. Tips on Setting Up Your Small Business Bank Account
  13. Debit and ATM Card Advice for Small Businesses
  14. Q and A: Personalized Birthday Cards from Paul Leonard
  15. Small Business - Big Business...What's the Diff?
  16. Making Your Purpose Your Business Step #2- Getting From Point A to Point B
  17. How to Locate, Hire, and Work With an Article Writer
  18. What an alarm clock can teach us about online collaboration
  19. Why do startups and small companies need to attend trade shows?
  20. 11 MONSTROUS Small Business Marketing Mistakes and How To Avoid Them
  21. Your Baby's Ugly..and You've Got Bad Breath
  22. Why Small Business Must Turn to PR
  23. Successful Small Businesses Use PR
  24. Small Business 'No' How - Don't Give Away the Farm
  25. Success Tips for Small Business Owners
More related feeds
Forming a Corporation - Investors
You’ve come up with the best idea since sliced bread, figured out a business name and formed a corporation. There is, however, one small problem. You need money. Welcome to the world of investing. Business Funds Unless Bill Gates is ...

Forming a Corporation - Investors
Investors are looking for the best deal, to wit, the most stock possible in an entity. If you are asking them for cash, they have the leverage. Don’t be so desperate that you give away the farm. All to often, I speak with individuals ...

Technicals indicate a possible stock market rally
With right shoulders apparently forming, equities may rebound in coming sessions toward tests of the patterns’ neckline resistance near 8900 for the Dow Industrials (US30 CFD), 900 for the S&P 500 (SPX500 CFD) and 1200 for the NASDAQ ...

Is Hitting Bottom Twice Enough For Cintas? | December 02, 2008 ...
Cintas Corp. (Nasdaq:CTAS) - Taking a look at the daily chart of Cintas Corp, you'll notice that a double bottom has formed over the past two months. Bullish short-term traders will wait patiently on the sidelines until the price rises ...

Nevada Incorporation - Advantages of Forming a Corporation in Nevada
It’s easy to raise capital for a corporation through the sale of stock. Investors are much harder to attract to sole proprietorships and partnerships because of personal liability. Investors are more likely to purchase shares in a ...

Will the business be heavily dependent on investors for its capital?
If a business will need a large amount of invested money, its organizers should pick an entity that will be attractive to the kind of investors that best fit its needs. This may mean forming a corporation, which represents the best ...

peHUB » Blackstone & CMS Forming New Company
Blackstone & CMS Forming New Company ... Blackstone seeks to create positive economic impact and long-term value for its investors, the companies it invests in, the companies it advises and the broader global economy. ...

INVESTORS! Why the Next 60 Days Could Save Your Retirement
Envirodyne, up 1704%; Optical Coatings, up 1579%; LA Gear, up 820%; 4Kids Entertainment, up 786%; Photon Dynamics, up 971%; Glenayre Technologies, up 688%; Holly Corporation, up 457%; Hansen Natural, up 1125%. And while most investors ...

List of 200+ Successful and Professional Investors on Seeking Alpha
Prior to forming Ahrens Advisors, he was President of the MUTUALS.com Funds, and served as portfolio manager of the Generation Wave Growth Fund (GWGFX) and the Vice Fund (VICEX), which he stated in 2002 ...

Japanese Government Corporation to Cooperate with ESPO
If the geological prospecting succeeds, the private Japanese companies will bid for the share of the Corporation in the project – the Japanese Government make this move to ensure the investors against geological risks; ...

 


 

© 2007 articlesreader.com - All Rights Reserved