Should I Accept Outside Funding?
When I wrote my business plan I planned on bootstrapping. I was not considering looking for investors and I did not want to use debt instruments to fund the startup phase of my business. I wrote my system, built my site, paid for professional web-design and branding, and filed for a patent. This has taken two years and a little over $15k – paid for out of my own pocket. My original plan was to do all initial marketing (mainly cold calls and site visits) myself and grow very gradually.
I have an acquaintance that I respect and who is a very good salesman. I had even considered approaching him sometime in the future once I had a sales force large enough to warrant a full time sales manager. I asked him for some advice a few months ago and we started talking. He stated an unsolicited interest in investing a substantial sum for part ownership. I initially declined his offer since this was not in my business plan. Several conversations later he is now my first sales person and will start in January working as a part-time employee for commissions only.
I didn’t expect such help so soon and now I am wondering if I was too cautious in my planning. If you were in my situation would you trade a minority share of you business in order to afford more marketing and gain the possibility of faster growth? For the sake of this argument the individual is someone I have known for several years and is someone I have found trustworthy.
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