To start a venue business, one of the most critical things to consider is sufficient funding. This capital helps nurture the business during its earliest stages and overcome any possible hurdles until it's fully developed.
The cost of setting up and maintaining a new venue business can sometimes be overwhelming for aspiring venue owners seeking funding sources.
If funding seems to be precluding your dream of becoming a successful venue owner, don't fret! Here are some tips on how to acquire venue funding and get your business running in no time.
1. Angel Investment
An Angel investor (also called a private investor) is a person who provides funding for business start-ups. These investors are usually high-net-worth individuals looking to invest in new businesses in exchange for ownership equity in the business. Depending on the nature of the business, Angel investors may provide one-time or ongoing funding to keep the business alive.
New venue owners can always research Angel Investors as a possible funding source. A compelling business plan and experiences with operating a venue business may be required to convince them.
2. Venture Capitalists
Venture capitalists are private equity investors that help to fund businesses with high growth potential. They do this in exchange for an equity stake in the business. Although venture capitalists generally tend to fund ongoing operations, if the idea sounds profitable, they may finance the venture.
Like angel investors, these capitalists are constantly seeking profitable investment opportunities. Venture capital and private equity firms seek out investment opportunities that have experienced management and innovative and disruptive business models. Developing a effective business plan, researching locations, maintenance and overhead expenses costs, profit expectations, etc. can make your business idea more attractive to a venture capitalists...
3. Obtaining Loans through the Small Business Administration (SBA)
If you are having difficulty obtaining a traditional business loan, you should consider an SBA secured loan. When the bank thinks your business is too risky to lend you money, the U.S. Small Business Administration (SBA) may agree to guarantee your loan. In this way, the bank is less risky and is more willing to provide loans to your company.
The downside to SBA financing is in return for the risks they assume in financing new ventures is the credit risks to the borrower that must secure all their personal assets as collateral for such loans. This means that your personal home(s), property, savings/retirement accounts and/or other assets can be lost if the business fails and you are unable to repay the SBA-backed loans.
4. Negotiating Lease Concessions And Vendor Credit
Another source of start-up financing can be derived from negotiating with trade vendors and other suppliers of goods and services required to open and operate the business. Since the start-up expenses required to open the business are the reason for needing capital for the business, it can be possible to negotiate credit from the vendors of the business thereby reducing the need for start-up capital.
One of the largest start-up expenses is the cost to acquire/lease/renovate the venue facility. An great source of this capital is negotiating rent credits and tenant improvement capital directly from the owner of the venue facility. For example, free rent for the first 90 days of occupancy; reduction of security deposit or spread payment for the security deposit over the first 6 months of the lease; negotiating credit terms for the acquisition of furniture, fixtures and equipment, and/or bartering with such vendors for free use of the venue for their events, meetings or gatherings in return for the supplies or services they provide.
5. Personal Credit Cards And Lines of Credit
Your personal credit card are a readily available source of capital for start-up capital. Credit cards are easy to obtain (if you have a decent credit ratings). Credit cards can be obtained from various financial institutions in various amounts and financial terms. If you use this source of capital for start-up funding, be sure to be mindful of interests rates and repayment terms. However, some credit cards may provide benefits such as cash rebates, travel mileage, and other rewards and benefits for using such cards.
6. Speak with a Venue Consultant
As a venue consultant I assists new and existing venue owners in building and facilitating successful venues. Simply put, I can point you in the right direction to ensure your venue flourishes. This assistance also includes helping you find the best way to go about obtaining venue funding. If you need more assistant, book a strategy call and let’s get you on the right track.
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