We've all heard the old adage: It takes money to make money. Then there's the average rule of thumb that states that a business needs to be functioning for at least 3 years to fully support itself and grow. In the meantime, an entrepeneur needs to be able to either:
a) Have enough funds available to support the business for the first 3 years until the business starts producing
b) Get enough financing to get the business through the first 3 years before it produces
What if your business doesn't produce in the first 3 years? What if you need more years to produce? What if your estimates were wrong and you need more money than you originally thought? What if you lose all the money you've put into it? Worse yet - what if you obtained a loan to finance your business venture?
Going the traditional route to start a business doesn't suit every entrepeneur. The traditional route involves saving money, applying for a loan, and hoping that all of creation will be on your side as you grow your business. On the upside, if you have previous business experience, you are more likely to prevail. Newbie entrepeneurs have to tread very carefully to not mis-spend the loan funds. You must have extremely good credit, and cash reserves to hold you over for the first two to three years of business to help ensure your success.
This scenario does not apply to the majority of entrepeneurs these days. Creative procedures need to prevail here. As a budding entrepenuer, it is imperative that other routes of raising capital be found. Here's where thinking "outside the box" comes into place.
Music Concerts have always been a great form of entertainment. However, the larger concert producers have hit a snag in this economy. Bigger isn't always better. Live Nation is a huge conglomerate in the music business. With big arenas no longer filling up to a satisfactory capacity, LiveNation's profits have dropped for the 3rd quarter of 2010 (http://www.variety.com/article/VR1118026955). AEG Live owns and operates all of their facilities and swallows up contractually their artists. The average human being believes they cannot invest to profit from music concerts - or can they?
There are investment opportunities with smaller music concerts. There are legitimate smaller concert promoters that organize and promote musical acts and smaller venues. It is possible to invest with these promoters in their concert acts. The amount can be as small as $10K to 100K, depending on several factors which include the cost of the act, and the venue. The value is the short time you need to invest and the return on investment. You can invest for as short a time as 3 months to 6 months and get excellent returns.
Oil and Gas has ALWAYS been a lucrative investment. To get the most return on your investment you need to invest early on in the company - before the stock splits, and before they go public. Getting in on the ground floor is key. There are legitimate Oil and Gas ventures that during their nascent phase will offer what is referred to in the industry as "mailbox money" returns. This means that for your initial investment, which can be as low as $16K (depending on the company), you will receive monthly checks as long as the oil and gas wells produce - that could virtually be as long as 50 years.
Short term/high yield unconventional investing can work. Just as long term investment in a market that is sure to be around for decades. Doing your homework and knowing who the leaders are is an absolute must. Using these investments while you are raising the money to start your business operations can save you from having loads of financial headaches down the line. These are a few of the great ways you can self-fund your business venture and NOT lose your shirt.
Tune in next week while we further explore business start-up self funding.
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