Finance Your Business with Private Investors and Silent Partners

increasing profitsA start-up business can initially face financial difficulties. But, you should know that there are many ways of financing your small business venture. Having silent partners and private investors is one good way find financing for your business.

A silent partner

Having a silent partner is an efficient way of financing your business, without compromising the control over the business. Also known as sleeping partners, they have very limited authority over your business. The silent partner will invest in the company without taking up any authority, or right to vote in the company's decision making process. They will not have any hands-on interaction with the company authorities, or in the day-to-day activities. Instead, they will be more interested in focusing on the returns of their investments.

It is advisable to include family, and friends whom you have known for a long time, as your silent partners. Do make sure that your silent investors understand their rights, and that they do not have even informal authority over the company.

Profit distribution

The investment will be paid back as installments over a period of time, as a company's miscellaneous expense. The silent partners will also receive an agreed percentage of the annual profits of the company. The profit obtained will depend on the amount invested by the silent partner. The profit will also depend on the number of partners that the company has.

Private investors

Another way to fund your business is by seeking private investors. Unlike silent partners, private investors will wish to play an active role in the company. So, look for investors who are near the location of your business, so that you can communicate with them on a daily basis. These investors may want to learn more about how the business is being run, and they may also want to have a small role in the business operations. You can offer them a seat in the board of directors. You can get an idea about the private investors in your area, by visiting the office of the Chamber of commerce. This is a better option than securing a low-interest loan for your business operations.

Project your business

A good way of finding more investors and silent partners for your business is to make your business look more interesting. You can create favorable dynamics for your business by securing new investment, advertising the company in the media, and by developing a revenue stream. To find good silent partners and private investors, you should necessarily create a business plan. This business plan should show how the company would create a positive cash flow in a reasonable and fixed time. If you have a feasible business plan, finding investors for your company would not be a hard task.

Angel Investors

You can depend on angel investors to be your silent partners and private investors. Such investors are wealthy people, who are capable of funding the business during the start-up phase. You can rely on many investor networks, which can be found on the Internet, to connect with these people. You can also seek the help of lending firms, which have many silent partners and investors, who are ready to help you.

A post by Kidal D. (5810 Posts)

Kidal D. is author at LeraBlog. The author's views are entirely their own and may not reflect the views and opinions of LeraBlog staff.