Funding vs bootstrapping?

[David Sandusky]

A business I am involved with is very busy with great marketing and more business than can be handled. The company is doing well with cash, own top equipment to produce great products in house, but not enough to expand office and hire great talent. The options are to keep plugging along working "in" the business with 100% ownership (continue having a lot of fun BTW) or, take it to the next level faster with someone Else's money? Heavy + and - on both sides. What would you do?

[jbliler]

Obviously, you felt strong enough to mention that they are having a lot of fun where they are at, which shows that the business owner is having a lot of fun working "in" the business rather than on it.

Becoming a larger company and employing people, you are forced to work on the business full time. Especially when there are investors money involved. Unless of course, your Bill Gates and employ the leaders for you and name yourself the "Chief Architect". I would say that the business owner needs to be driven by the fact that they can have a larger company with increased revenues to offset the loss of ownership percentage. In this case, it sounds like they need to stay put and enjoy the ride.

[CXO Tyler]

A tree that is growing well and healthy will sometimes not grow faster with more water. Owners should carefully assess what increased capital can really do for them-there are many financial models that can help to determine this. Ultimately, if the business will suffer do to increased competition, then it should look to expand now, before the owner moves from thinking about expanding to survival.

[Kevin Johansen]

The capital formation processes for most businesses is problematic in that it changes the harmonics of the organization. By this I mean that the doing of it requires a lot of time and kind attention, which is time and attention taken away from finding a customer. Note also that selling equity in one's company puts one in the shareholder relations business, which is not the business most founders want to be in.

So in brief, it's my strong opinion that funding should be sought for expansion and not development. If you're seeking funding for development, you're not sure what your business is about yet. If you figure this out quickly using other people's money, great! If not, plan on losing control of your company.

However, if you've gotten things to the point that you've a solid equation in place for expansion, by all means seek funding for it if you want to grow faster and have the bandwidth to deal w/ shareholders and an active board of directors.

Best,
Kevin Johansen

[foundit]

Outsource with sub contractors until the cash flow is heavy enough for full time talent?

[David Sandusky]

may depend on discipline vs. equipment vs. core competencies of the company. Or at the end of the day, control (or trust really) which is usually the hurdle some founders face in the ability to expand.

[BarJon]

Originally Posted by Kevin Johansen

The capital formation processes for most businesses is problematic in that it changes the harmonics of the organization. By this I mean that the doing of it requires a lot of time and kind attention, which is time and attention taken away from finding a customer. Note also that selling equity in one's company puts one in the shareholder relations business, which is not the business most founders want to be in.

So in brief, it's my strong opinion that funding should be sought for expansion and not development. If you're seeking funding for development, you're not sure what your business is about yet. If you figure this out quickly using other people's money, great! If not, plan on losing control of your company.

However, if you've gotten things to the point that you've a solid equation in place for expansion, by all means seek funding for it if you want to grow faster and have the bandwidth to deal w/ shareholders and an active board of directors.

Best,
Kevin Johansen

Help me out here...title says bootstrap, but the advice seems to point a different direction in using other people's money, etc.