Alternative Funding

Funding is a very crucial aspect of a startup company. Sufficient funds can make or break the success of a company. In the process of finalizing my own startup venture, LODI Music Group, I have researched alterative funding sources to secure adequate funds for launch of my company.

The alternative funding sources that caught my attention were CDFI Coalition (Community Development Financial Institutions Coalition) and the AEO (Association for Enterprise Opportunity). Alternative funding sources are interest groups that are community activist that develop communities by supporting entrepreneurial endeavors. 

CDFI is a member based program where as members benefit by a funding program that has three separate components: The Financial Assistance (FA) component, the Technical Assistance (TA) component and the Native American CDFI Assistance Through these three components, the CDFI Program provides loans, equity investments, and grants to CDFIs to support their capitalization and capacity building, enhancing their ability to create community development impact in underserved markets. The AEO is also a members based program that has a Southeast Initiative that is focused on building the capacity of microenterprises. TILT Forward is second initiative that AEO is offering that is a loan program hat helps borrowers save on interest.

Requirements for the CDFI’s Capital Magnet Fund is to be a certified CDFI or a non-profit organization operating with a principal purpose of developing or managing affordable housing solutions. There are several different programs with different requirements.

Both organizations offer events and conference meet-ups to educate entrepreneurs in order to better their business practices.

Business Plan Expert Tips

A business plan is the blue print of your company rather it’s a startup or a pre-existing company that’s venturing into new avenues. However, in both cases the business plan is the tool that is used to benchmark rather or not your company/project is a sound investment in the eyes of investors. There are key expectations that venture capitalist look for in a business plan. Experts such as Matthew Swyers, founder of The Trademark Company and former trademark examining attorney for the United States Patent and Trademark Office, and Shark Tank venture capitalist and FUBU clothing founder Daymond John writes “5 Things Your business Plan Absolutely Must Have”, and “What Venture Capitalists Want: 4 Tips”.

From experience, one of the most important question investors want answers is “how much return I will get and how fast?” Interesting know that Daymond John states, “Proof of Concept” is first. According to Daymond, investors want to the proof of the numbers, they want to know how much money your idea has already made (John, 2015). Whereas Matthew states that investors want to know “how much will your sales increase do to there investment?” (Swyers, 2012) Help yourself before someone will help you. Although business is risky for entrepreneurs, investors will only take a calculated risk on any venture. Investors want to know that you already have a market and Daymond John states that it’s several ways to prove that such as, sales numbers, a successful crowdfunding campaign, and market studies (John, 2015). If you were already making money, why would you need investors? Businesses are meant to grow. That is the precise reason why Matthew Swyers is saying investors are interested in your growth after the investment (Swyers, 2012). If there is no growth there is no need for the investment and no reliable means to recover the investment.

Experts Matthew Swyers and Daymond John both had excellent insights on creating a successful business plan. A couple key takeaways would be to have a successful crownfunding campaign, that way you build a supporting audience in the process. Matthew also states the importance of being unique (Swyers, 2012); although many ideas are not original your idea must have a unique twist in order to be considered by investors. Daymond John states that knowing your competition and being unique are not enough, you also have to know your pitfalls and have a contingency plan (John, 2015). In creating a solid business strategy for LODI Music group, there will be contingencies built into the plan to insure a more solid structure.

References

John, D. (2015, October 26). 5 Things Your Business Plan Absolutely Must Have. Retrieved January 7, 2016, from Daymond John's Launch Academy : http://www.djlaunchacademy.com/5-things-business-plan-absolutely-must-2/

Swyers, M. (2012, April 12). What Venture Capitalists Want: 4 Tips. Retrieved January 7, 2016, from Inc.: http://www.inc.com/matthew-swyers/what-venture-capitalists-want-4-tips.html