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  1. #1
    Join Date
    Jul 2004
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    Investing for a recent college graduate

    I'm looking in to starting my own small business (bar/lounge) in a few years, but I don't have nearly the start-up capital I need.

    I was wondering if there were any investors on here.

    Where would you suggest putting the money? I've invested in mutual funds since high school, but I want something more aggressive w/greater risk/return.

    Are there any type of bonds/funds/account types that are specifically made for those looking to start a business in the future?

    If any of you run a small business, where did you generate the capital (provided it wasn't just given to you)? Lots of saving? Outside investors? Investments?

  2. #2
    Join Date
    Mar 2002
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    England
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    Firstly you need to make sure you know what capital is . Capital refers to all the goods used to produce consumer goods, for example, machinery. What you're referring to is financial capital. A lot of people tend to produce a comprehensive business plan and present it to a bank in order to get a loan to startup the business.
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  3. #3
    Join Date
    Aug 2003
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    A bank - Low Interest Rates, Smaller Chance To Get Money, Must Put Down Collateral, They don't keep ownership of the company. Much more risky.

    A Venture Capitalist - No Interest Rates, Greater Chance To Get Money, Usually no collateral necessary, They keep majority ownership of the company. Not as risky.

    A bank is more risky, but yields greater returns. A venture capitalist is less risky, but you wont get nearly the sized returns you would from a bank. Often times family members can be a great help, and can contribute to the start of your new business. If you have some cash to work with, you can definetely include that in your presentation to the bank, so they know you're serious and want to work hard with it. Best of luck to you. (Btw, not knowing the proper definition of capital and being a college grad is NOT a good start )

  4. #4
    Join Date
    Dec 2003
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    Originally posted by JHosts
    (Btw, not knowing the proper definition of capital and being a college grad is NOT a good start )
    Where does he show an incorrect understanding and/or usage of the word "capital"?

    Anyhow, a bar or lounge is a pretty large and ambitious effort for a first company; have you started any other operation when you were younger, to get a feel for running a business, especially a brick-and-mortar one?

    You'll need a humbling amount of capital to even think about or plan this operation, let alone execute it. However, I'm assuming you know this already, and that you are asking solely about the methods by which to obtain said capital. Therefore, I can offer you a few suggestions, although I don't have much personal experience myself actually getting capital for serious projects (I've never really had any serious projects, as you may be planning right now), so don't take my suggestions more seriously than anyone else's.

    • Banks - As Frank said, the bank can offer you a decently-sized loan, provided you have enough/good enough credit, with a pretty impressive interest rate; banks demand less in return than do most VCs (venture capitalists), so that's an upside.
    • VCs - A VC can be both a royal pain in the *** and a dream come true, depending upon the VC and the situation; while VCs can often offer you consulting in addition to investing monetarily in your company, they also often demand more in return and that things are done their way. A VC can be anyone from your dad or uncle or grandfather to a venture capital company which consists entirely of VCs and whose entire executive statement consists of investing in companies such as yours.
    • The paradox of saving - While it might be the long and hard route, and while one might think it would take many years to save enough to start a brick-and-mortar business, saving money enables you to choose what to do with your money and when, with no external influence from anyone but yourself. Obviously, the length of time required to save enough money to start your business smartly (i.e., accounting for enough extra cash in case of an emergency or decreased profit and without cutting corners where corners cannot be cut) will depend upon how much you make while you're saving and the business for which you are trying to save.
    • Stealing (Not recommended) - Steal and cheat your way through life -- self-explanatory.
    • Selling/dealing/distributing/growing/mowing/picking/using/otherwise associating with drugs (Not recommended) - Self-explanatory, although quite illegal, and thus not recommended.
    • Scamming/spamming/anything else illegal (Not recommended) - Run a Nigerian scam, ask for CC numbers, learn the art (yes, truly it is an art) of social engineering -- whatever you have to do to make that darn money! Just kidding

  5. #5
    Join Date
    Mar 2004
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    1,468
    What about the stock market?

    It certainly fits the "aggressive w/greater risk/return" criteria.
    Haven't been on WHT for 6 years!

  6. #6
    Join Date
    Jan 2005
    Location
    Richmond, VA
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    Weavil,

    Go with stock options and real estate options. Get some good books on both and really dig into them.
    Daniel B., CEO - Bezoka.com and Ungigs.com
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  7. #7
    Join Date
    Jul 2004
    Location
    Va
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    To defend myself....In school I learned start-up capital (aka working capital) was the funds needed to obtain all of the equipment, licenses, facilities, etc. for the opening/first year of business. Capital just being the money and goods to produce income. Hopefully that shows I paid a little bit of attention in school.

    Anyways, I appreciate the help so far. I just recently graduated and my plan is to open the business before I'm 30 (I'm 23 now). Now that my school debt is dwindling I want to focus on putting my time/money/effort into my goal of owning my own business.

  8. #8
    Join Date
    Jul 2004
    Location
    Va
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    Originally posted by jasong
    What about the stock market?

    It certainly fits the "aggressive w/greater risk/return" criteria.
    This is one option I'm going to pursue, but I'm looking for other ideas as well. I figure the more diversified my financial portfolio is the better off I will be.

  9. #9
    Join Date
    Dec 2003
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    Fairfax, Virginia
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    I can't believe I forgot to mention investing in securities -- although, now that I think about it, maybe that's not such a great idea, as you probably don't have enough money *now* to make it a viable option with significant return in the short-term future.

    The stock and commodities markets (not to mention real estate, which is a whole different ball game) are so much to just delve right into, you might find yourself spending all of your time doing research and not nearly as much time making use of that knowledge and actually getting returns. There are countless books on trading, and it's very hard to find one whose strategies actually work -- probably because the author, if he was successful, understandably wouldn't want to give away his secret trading methods.

  10. #10
    Join Date
    Aug 2003
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    Syracuse, NY
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    Don't put all your eggs into one basket. Keep a diversified portfolio. Sure you can open your own business, but keep something a bit more secure, like an investment account with a financial group. Put like $5,000 into the account and let them diversify and earn money for you. This CAN be a high return, though is rare. It almost always will make more money than interest on savings accounts. Last but not least, think about retirement. I'd reccomend a Roth IRA or when you become self-employed a SEP IRA. They can yield huge returns for retirement (investments over time of only $xxx,xxx or less, can turn into $x,xxx,xxx by the time you retire.)

  11. #11
    Join Date
    Jan 2005
    Location
    Richmond, VA
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    Originally posted by JHosts
    Don't put all your eggs into one basket. Keep a diversified portfolio. Sure you can open your own business, but keep something a bit more secure, like an investment account with a financial group. Put like $5,000 into the account and let them diversify and earn money for you. This CAN be a high return, though is rare. It almost always will make more money than interest on savings accounts. Last but not least, think about retirement. I'd reccomend a Roth IRA or when you become self-employed a SEP IRA. They can yield huge returns for retirement (investments over time of only $xxx,xxx or less, can turn into $x,xxx,xxx by the time you retire.)
    Ugghhh...no offense, but I hate it when I hear someone say 'diverisfy and let someone else handle your money'. IMHO, it's best to take *your* money into *your* hands and be responsible for your financial matters yourself. You'll have a much better experience that way, you'll learn so much more, and you'll probably make a lot more too!

    And here's a thought - when the boomers start to retire en masse in ten or so years, and begin to pull their money out of the stock market in droves, what do you think will happen to the value of younger people's portfolios? Don't mean to scare everyone, but that's a *huge* alarm *not* to just throw some cash into a retirement account and forget about it.

    *Now* is the time for people young and old to start building a significant inward flow of cash outside of retirement plans. That's what building a business is all about anyway, right?
    Daniel B., CEO - Bezoka.com and Ungigs.com
    Hosting Solutions Optimized for: WordPress Joomla OpenCart Moodle
    Data Centers in: Chicago (US), London (UK), Sydney (AU), Sofia (BG), Pori (FI)
    Email Daniel directly: ceo [at] bezoka.com

  12. #12
    Join Date
    Aug 2003
    Location
    Syracuse, NY
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    By managing it yourself, you increase the risk a LOT more. I was talking about a secure long term investment plan. Also keep in mind, these old people selling out stock, means they plan on spending a lot more too. It will become a huge buying stage in the economy, and will actually get better, not worse.

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