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Opening a Business Using Venture Capital Funds
Richard worked as a mechanic for one of the biggest car manufacturers in Detroit. Given the employee’s 20 years of experience, this person has moved from one section of the plant to another making some people think that Richard can possibly assemble a car single-handedly.
Unfortunately, the poor sales performance in the past few months of the company has forced management to make a big sacrifice. This will involve slashing 20,000 jobs from the workforce and Richard was on the list.
Rather than wait for the pink slip to come in, Richard opted for early retirement. With the money saved, this individual can start a business, which was something always inside this person’s head.
The plan was to open a shop that restored old automobiles as well as serviced existing ones. Though it was a fact that there are a lot of entrepreneurs that do this, the research Richard did showed that there were not that many of these in the neighborhood.
Richard had a fat check coming in, as part of the retirement benefits but the startup capital was not enough so this person decided to get venture capital funding.
Venture capital funding is when a startup business or an existing one needs funds from outside people to sustain or keep it growing. While there are banks that can help do this, it is easier to deal with private individuals since the interest rates are not that high and these supporters become strategic partners.
Who are the people to tap when it comes to venture capital funding? Given Richard was engineer who worked on cars, it wasn’t hard to talk to one of the former bosses and other people who also love automobiles.
Richard first wrote a proposal with the location of the site, projected start up capital and sales that will happen in the succeeding months and years. Since these investors saw the potential of the business, it wasn’t long before the additional money needed was given.
After three months of renovating the old building, the shop was already operating and the customers started to come in. Servicing cars was easy in fact, people who worked at the plant would drop by and have the automobiles done there. It took longer to restore old cars since the parts were hard to find.
Within a year, more than half of the amount that was borrowed from the partners was already paid. As long as the service given is maintained, it was possible for Richard to pay everyone off and perhaps even expand the business.
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