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AjayVirdi
02-03-2015, 06:22 PM
Is getting 100% investor funding to buy a business and operate it with 100% investor funds a realistic goal? I would like to purchase a business but do not have the LEVEL of funds to buy it. I figured I can turn to investors to fund the acquisition and operation while I run the business. I understand that this will leave me with a lower stake in the company's revenue, but is this a realistic scenario to begin with?

Harold Mansfield
02-03-2015, 07:17 PM
Is getting 100% investor funding to buy a business and operate it with 100% investor funds a realistic goal? I would like to purchase a business but do not have the LEVEL of funds to buy it. I figured I can turn to investors to fund the acquisition and operation while I run the business. I understand that this will leave me with a lower stake in the company's revenue, but is this a realistic scenario to begin with?
No. It's not. Unless.....


You have a well known expertise in the industry of the business you want to purchase. For instance if you were an awesome chef with the reviews, experience, resume', pedigree and notoriety that gives you some kind of culinary following, then yeah..you can probably find a restauranteur to invest in you and build the whole thing.

If you aren't that guy...then it's doubtful that a stranger is going to pony up 100% of the money because realistically, if that's the business they wanted to go into..they don't need you.

Actually without some well known expertise or bringing something into the game, I can't think of any instance where you don't risk or sacrifice a dime, someone else does 100% of the investment, but they still cut you in on the profits. That's just not very realistic.

CCAdamson
02-04-2015, 02:33 PM
Actually without some well known expertise or bringing something into the game, I can't think of any instance where you don't risk or sacrifice a dime, someone else does 100% of the investment, but they still cut you in on the profits. That's just not very realistic.

I think those people are called the EMPLOYER!

If an investor wants to run any kind of business they will likely find a way to get into it. If you are subject matter expert then they would hire you. Maybe cut you in for a stake of the company in return for your expertise but 100% funding is a very unlikely scenario.

Company Growth Partners
03-11-2015, 08:06 AM
You do have opportunities to get Funding for your business without giving up equity provided you have been trading for at least 1 year...

donald12
03-23-2015, 04:46 AM
The company's revenue can be at stake because of lack of investment to provide the needs of a business. Employer's must be needed in order for you to have help in the local revenue.

2for1Creditlines
04-23-2015, 03:25 PM
Is getting 100% investor funding to buy a business and operate it with 100% investor funds a realistic goal? I would like to purchase a business but do not have the LEVEL of funds to buy it. I figured I can turn to investors to fund the acquisition and operation while I run the business. I understand that this will leave me with a lower stake in the company's revenue, but is this a realistic scenario to begin with?


While typically you would think someone purchasing something for 100% means they own 100%, in a business arrangement, this can vary wildly because it comes down to where the real value lies.
There are many investors who operate as silent partners, all they want to see is strong return on their investment. They may own 100% of the business, but it's not going to run itself. You can hire employees and a general manager, but I'm on the beach in the Caribbean, drinking from a pineapple, and my wi-fi laptop doesn't work well when I'm snorkeling, so I didn't bring, which means I'm not hiring anyone.

I'd rather bring in a working partner, give him 30% - 40% of the business so he's motivated and will care about our company, and he'll handle everything. If happens to be good at marketing, or maybe he's a celebrity chef or has a huge online following, I might give him 50% - 60% of the business, and let him blow it up, and I'll sit back and rake in a 300% return on investment.

It all comes down to the lender/investor, and how much you're bringing to the table. If you do acquire this business, DO NOT settle for being an employee if you will be running the business. If you went through the trouble of finding, pitching, and successfully closing a lender/investor, you deserve part of the ownership!


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rabinowitze
04-26-2015, 07:16 PM
Despite the massive amount of cynicism that is present for entrepreneurs and small business owners, I not only believe that you can fund a small business entirely through investment, but I have personally seen it done. Over the years, I have worked for companies and worked with clients who were able to achieve 100% investment to obtain capital; to be fair, however, this was and continues to be extremely difficult. Having a strong, experienced business consultant is a key factor in achieving this goal or, alternatively, you can spend a ton of time in studying up and become very knowledgeable yourself.

The biggest factor in obtaining investment, whether for start-up capital, expansion, or any other reason, is to prove your knowledge and experience in the field you are entering. To borrow the examples above, having already demonstrated proficiency or being a celebrity chef would make it very easy (although not guaranteed)! Writing an extensive, comprehensive business plan which details not only the basic information required to start and operate your business, but also contains a wide array of variables already accounted for, as well as a number of contingency plans anticipating disasters, market changes, labor shortages, etc., is a necessity to have before you ever approach an investor. Although there is some disagreement in the industry, I tend to recommend and/or write business plans between 85-145 pages long for start-ups and relatively new businesses, and I never expand beyond the next (or first) 36 months, as anything beyond the first year is rarely more than speculation.

Finally, if you are going to seek investment, take the time to learn the difference between Angel Investors and Venture Capital;

The short form on this is that Angel Investors are generally (and I cannot emphasize that word enough) more focused on developing a key market in a region, and less apt to try to push for control of your business. On the opposite side of the coin, most Venture Capital firms (this being >90% in my experience) will NOT invest unless there is the potential for a change of hands, a takeover (hostile or otherwise), or the ability to remove you from your business and install their own team if they don't like how things are going. Please bear in mind, this is not "The Rule," but a good starting point to look at. As with all things in business, read three times, consult a lawyer when you have a doubt, and if it sounds too good to be true, it probably is!