Better Access to Capital
How important is access to capital for the success of an entrepreneur? It’s kind of like asking how important is access to grain for a cow producing milk? It’s hard to imagine how it happens without.
Today we have more small business owners, entrepreneurs and innovators than at any time in our country’s history. The majority of these operate their businesses on a shoestring budget. Granted, necessity is indeed the mother of innovation, but at the same time. The markets have borne out that a small infusion of capital is the mother of a scalable business model.
Make no mistake, most ideas are scalable. If it works for one family, it will work for millions of others. If it’s good for one business owner, no doubt it’s good for many others.
The Cultural Impact
If entrepreneurs and small businesses succeed, America succeeds. In essence, it’s been the formula driving American prosperity and leadership for over 200 years.
This principle brings up some interesting debates:
- Should our country do things that empower small business owners?
- Should we hurt small business if it’s done in favor of other policy goals?
- Should we hurt small business in order to help the largest companies in our midst?
Below is some brief analysis on these three questions and proposed starting points for solutions
Generally Empowering Small Business
Most Americans love small business. They love neighborhood restaurants and stores, the ability to pick up the phone and call a contractor, and the fact that it gives them hope of more control over their own destiny.
So if we remove barriers to entry, enhance opportunities for access to capital, and encourage entrepreneurial people to keep trying, even after a failure or two or three, we create more opportunity and greater independence for our neighbors and communities.
Policy Goals that Hurt Small Business
Regulations and taxes almost always fall disproportionately into the laps of small business. They are the easiest to regulate and have the least capacity for fighting against tax burdens. Truly, small business owners have become the middle class of 21st century America.
If we fail to create protective boundaries around small business, we will hurt our economy in ways it will take many years to recover from. However we’ve done this in the past, we should take care to avoid repeating. Get out of an entrepreneur’s way and he or she will succeed!
The Dominance of Large Corporations
Today I hear many arguments in favor of allowing the monopolistic powerhouses like Amazon, Google, Apple and Facebook to just keep doing what they do. “People have a choice”, “so many people make money on their stocks”, etc. These are the arguments I hear in favor of the monopolists of our time.
Here are a couple of problems with that advice. As Shoshana Zuboffmakes the case in her recent book, The Age of Surveillance Capitalism, the sheer volume of information that we have shared with the Tech Titans has rendered us all vulnerable to a new level of control over our lives, we fail to even contemplate. This reality alone should cause every one of us to participate in taking the steps needed to begin pushing back against them.
As important as that is, however, unless the little guy has the means to his own success, it does little good to rein in the power of the super-company. So what can be done to help the micro-business get up and running successfully?
After an idea is properly conceived, it needs enough capital to see the light of day. Angel investors are often called upon to make this happen. But what if access to one ideal angel isn’t there for an entrepreneur?
The startup owner needs a path to get the resources it needs to prove its concept and move ahead from there.
What does it take for a startup to get funded? Create a great story
- Develop a strong set of pro forma financial projections
- Well researched market analysis
- Creative and detailed marketing strategy with benchmarks to match your projections
- If it’s a product of any kind, a working prototype to go with the story.
With major investors, you also need to seek out their input directly and one on one to make a more personal ask for investment. It may take a few conversations with them before you finally get to the point you’re ready to ask for an investment.
If you can show investors all of these, you only need to find investors interested in your type of business and/or in you personally. It’s not a guaranty of millions of dollars, but it will get you a start with private capital, usually in the form of equity.
Of course, there is necessary legal documentation of the investments that are made and you need to consult with counsel to draft these properly.
The End Game
In 2019, it’s not unreasonable to envision a future where any American can start with his or her own most loved idea for business, develop it, refine it, and turn it into something that will succeed. But we need a business environment surrounding us that is wired for success, not overreaching government that will impair and destroy opportunity. The vigil of freedom is always worth the fight. The side of small business is the right side for all of us!