How Can A Business Owner Fund A New Business?

An Interview with N. Michael Miller 

Business Talk Newsletter is conducting a four part interview with N. Michael Miller.  Mr. Miller is a business owner, venture capitalist and published author.  Mr. Miller can be contacted at StartYourBusinessHelp.com which advises new business owners with consulting, business plan preparation and other services.

 

This interview will consist of four parts:

(1)    Start a new business now in this economy and the outlook for starting a business in early 2011 (Oct 14^th),

(2)    Funding the startup of a new business (in this Edition),

(3)    Managing a new business and how to do it right (Oct 28^th), and

(4)    Understanding how to keep a new business financially healthy (Nov 4^th).

 

Here is Part One of our Interview with N. Michael Miller.

 

 

BTN: Last time we talked about starting a business in this economy.  Now we are going to talk about funding the business that is being started.  In our first interview, you stated that a business has to be well funded from the very beginning.  Explain to our readers what you mean by this statement.

 

NMM:  When I am working with an entrepreneur that has never started a business, I consistently find that their estimates for startup and operational capital is about half of what it actually will be in reality.   Without some counsel, these new business owners would have started the business under-capitalized.  This is a death sentence for the business. 

 

When I say that a new business has to be well funded from the beginning, I mean that the new business owner must have in the bank all of the funds necessary for the startup and operations until the business starts producing a profit.  Those funds must be in that bank account from Day One.

 

There is nothing that will kill the enthusiasm of starting a new business quicker than money problems.  It completely diverts the business owners' attention from running and growing the company to trying to keep the business alive.  Once a business has gone on life support and looking for more money, it rarely survives.

 

 

BTN:  What are new business owners experiencing when they are looking for startup money?

 

NMM:  As in any economy, some new business owners are finding the funding they need for their business and others are not.  This reason some business owners are not getting the funding they need is not because of the economy, but a result of poor business planning on their part.

 

One of the most important steps in launching your business is protecting your ideas.  Larry Apolzon, an intellectual property attorney and co-author of From Edison to iPod: Protect Your Ideas and Make Money, offers some tips:

--KNOW YOUR PATENTS.  What patents do you need?  "A design patent protects the ornamental featured of articles of manufacture, and a utility patent protects the way things work," says Apolzon.  You can even patent software under certain circumstances.

--BE AWARE OF DEADLINES. From the time you offer a product for sale make any public disclosure, you only have one year to file a patent, he says.

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It is very rare that you will find someone that loves cold calling-someone who just cant wait to get up in the morning, pick up the phone and just knock on doors.  So for those of you who would like some alternatives, here are a few ideas.

1. SHOW UP.  Business opportunities can pop up anywhere.  At trade shows, for instance, you not only have hundreds of companies attending, but their nametags and titles are right in your face.  Whatever industry you're in  and whatever industry you are going after will have a trade show or association.  Show up and ask questions. Listen to what the companies and vendors are doing to build their business.  Take copious notes at every qualified encounter so that when you follow up, you can reiterate the prospect's key points.

2. SHUT UP. Sometimes, we are so busy blabbing about what we do that the other person has shut us out two minutes into the conversation.  When selling by telling, we often turn a warm call into a cold call.  When you're at networking events, dinners, golf outings and the like, stop pitching and start listening to the people around you and what they do.  It's so much easier to present pitch after they see the interest you take in them.  You've warmed them up.

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