Business Start-Ups ... THE TRUTH by The Patria Company, 08/31/10 10:08:51

It is obvious to us that the spirit of entrepreneurialism is still very much alive.  The Great Recession has not slowed down the American Dream.  Especially now during this time of unbelievably high unemployment, people of all ages are taking the bull by the horns and starting businesses.  Unfortunately there are some vicious myths running around about investors and their investments.

MYTH #1 - I have a great idea that no investor will be able to resist.

TRUTH - Investors invest in PEOPLE not ideas.  You are required to have a management team with a proven record of turning ideas into a lot of money. *

MYTH #2 - I have an invention that is going to make me and an investor very wealthy.  As soon as I get the money I will build a prototype.

TRUTH - You must have a working prototype or you must have a track record of several other working and profitable inventions.  Save your money and build it.

MYTH #3 - I don't have any money to get started, that is why I need an investor.  That is also why I am offering such a high return, surely an investor will help me.

TRUTH - Investors would rather get a guaranteed 2% return than bet on a speculative 5000%.  If you have not started your business you have no way to prove that you can produce the results that you have stated.  Furthermore, YOU MUST have some skin in the game.  Absolutely no investor is going to give you money if they aren't assured that you are also invested and have something to lose.  Think about it from this perspective, would you take your hard earned money and buy someone else a job?  You are asking for money so that you can own and manage a company.  From the Investor's point of view, who has more to lose if things go badly?

MYTH #4 - All investors are basically the same; they just want big returns on their money.

TRUTH - There is a huge difference between F&F (friends & family) Investors and Third-Party Investors.  In 99.9% of all the cases where someone received 100% financing for a true dollar-one start up, this was provided by an F&F Investor.  Third-Party Investors scrutinize heavily and you have a lot more to prove.  Third-Party Investors want a SAFE BET on a SURE THING, no matter what the projected return is supposed to be.

MYTH #5 - I only need a small amount of money from an investor, which should be easier to get.

TRUTH - Most third-party investors are not interested in deals less than $1MM and they almost never deal with start-ups.

THERE IS HOPE!!  Businesses are started every day on a shoe string budget and once in operation financing to grow can be much easier to acquire.  If you are in need of some assistance in getting started, please contact a representative for more information on services and rates.

* in some cases The Patria Company can fill that void where an individual or partnership does not have the recommended business acumen.  Please contact a representative for more information about our Strategic Alliance Services.