The Balance Between Business and Risk

Starting a new business in South Carolina and becoming a successful entrepreneur is, more often than not, a difficult journey. No new business owners should expect to achieve success overnight; achieving success is just not that easy. Most new business owners and/or entrepreneurs launching a new product or service put every ounce of effort, time and money into their venture hoping for a certain immediate outcome. From personal experience and working with hundreds of start-ups, small businesses and entrepreneurs over the last decade, it will often take years before for your business, service or product will turn a profit. Therefore, it is imperative that every new business owner or entrepreneur strategically prepare both financially and emotionally for a long journey.

Capital investment is generally the most important issue to address. The decision whether to use your own personal finances or seek outside investment to fund the start-up or launch of the new venture is the one question we hear most. As a rule of thumb, when investing your own money into your company, you should not invest more than 50% of your net worth. Moreover, if at all possible (watch out for your employers restrictive covenants), do not leave your full-time employment until your business can generate enough income to pay its business expenses. If the business can generate enough income to allow paying yourself too, this would obviously be optimal.

If you do not have the appropriate amount of personal capital to fund your start-up for at least a year, look for partners, SBA loans, private lenders, venture capitalist, and, most importantly, family. If you choose the latter route in seeking capital investment, the next issue you will need to address is whether you want to receive the money as a loan or sell equity in your start-up.

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