It doesn’t take rocket science to do gift basket business but it may drain your personal account if you don’t know where to look for financing.
Cynthia McKay charged $50,000 to her credit cards to launch Le Gourmet Gift Basket in 1992 (Mariah, 1999, ¶ 2-4). By 1999, her business raked in $ 1 million in gross revenues. I like to follow McKay’s footsteps sans racking up personal debt. Small-business owners have voiced out concerns regarding accumulated debt (Prince, 2005). And I, as a start-up business owner, do not want to experience the same fate.
At present, a rich relative is funding my business. But I know this is also risky. Having family and friends as potential investors may affect personal relationship (Franks, 2000). Petty arguments on financial and administrative matters may ruin ties with family and friends. I certainly do not want to experience that, either.
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So how else can I finance my gift basket start-up business?
Doing some legwork, I discovered several ways to line up seed money – small and large commercial banks, investment bankers, and venture capitalists (Franks, 2000). However, lending money from banks is often dealt with difficulty, especially for a start-up business. As Chuapoco-Remedio (2004), explains, “Banks consider a start-up as a high-risk debtor, and the reason is simple: it has no track record. They have nothing to go in evaluating its performance” (p.60). If I do get a loan, there are interest rates that I have to take into consideration.
On the other side, dealing with investment bankers, venture capitalists and angel investors is also not easy. Investment bankers and angel investors are individuals who “want to have some involvement with a business” (Franks, 2000). Getting seed capital from outside investors may seem like the solution to all start-ups but it may also mean chunking ownership or transferring shares to outside party. That defeats the purpose of starting a business on your own, right?
Given the pros and cons of financing options, I decided to get resources by investing in myself as Franks (2000) points out. A little bit tricky, yes, but I believe it’s a safe option that I can start doing with less financial worries involved.
Also read which of the following best describes the purpose of angel capital
First, I’ll look at my assets- things that I can sell. For example, if I have 2 laptops, one given as a gift, and another bought a year ago, I can sell the older model and use the newer laptop. People are always buying things, new or used, things they may need or things we take for granted but are considered precious by others. It’s very easy to sell nowadays, too. The advent of Ebay and other burgeoning ecommerce sites makes trading easy with just a few mouse clicks. At the same time, I’ll start saving money by cutting back my expenditure on ‘wants’ and buying only things that fall under ‘needs’ category such as food. I can also do projects on the side to add my seed money. There are various part- time jobs that are available on the Internet such as medical transcription.
There is also another way that Franks (2000) suggests, which I think, is also plausible for a start-up like me- bartering or helping possible suppliers in exchange for something. For instance, my neighbor needs someone to set up his Internet access. And I just had mine set up a few days ago. I know that this neighbor is an expert in creating corporate logos and websites. I can offer setting up his Internet access in exchange for designing my corporate logo and website. We can even negotiate for a discount. That way, we both benefit.
Finding capital for my gift basket business needs time, effort and a lot of patience. I like to believe that doing business is not a race and that I should grow at my own pace. Every business step has its risks. We simply need to weigh the advantages and disadvantages of every business step that we take. If can handle financing sources efficiently and effectively, that simply means I chose the best option that will help my gift basket business grow into hopefully, a profitable one.
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