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The Pros and Cons of Finding Private Investors



A key aspect of your business plan that you should examine is how you plan to finance vour operations. Although a combination of self-funding and loans is common for many small business owners, you also have the option of seeking venture capital from outside investors. However, like other financing options, investor funding has its limitations.


Still, the benefits could help propel your business forward, so it's worth considering.

To help you decide whether finding investors for your small business will be benefi-cial, we've compiled a list of pros and cons


Pros

  1. It's Not a Loan

  2. You Don't Need a Proven Credit History

  3. It Gives You Access to The Investors' Expertise

Cons

  1. It Dilutes Your Share of Earnings

  2. The Stakes Are Higher

  3. You May Lose Some Control

Financial capital is the lifeblood of most small businesses. Indeed, 29 percent of small businesses fail because they run out of cash. While you may be tempted to take funding wherever you can find it, it's important to weigh the costs and benefits of every option before proceeding.


If you don't want to forget a portion of your business earnings or be held accountable to others for your decisions, outside investors likely aren't right for your busi-ness. On the other hand, access to additional expertise may be exactly what your business needs to prosper long-term.

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