Sourcing: A simple breakdown

Let’s be clear, I am a novice stumbling through the perils of starting my own business. Until now I have been an idea man, creating something out of nothing. Bringing to light ideas that only exist on an imaginary plane. Most businesses fail because of a lack of preparation, poor understanding of competition, revenue, bookkeeping, but most importantly funding. I’ve been reading articles about funding from banks, investors, and angel investors and it is all convoluted language based on the assumption that you know what you’re doing. Let me clear some basics up before we move on to decoding entrepreneurial talk.

Sourcing in regards to angel investment means working towards receiving seed money to grow an idea past the idea phase.

Angel investment is an opportunity to receive money from an investor who is looking to help start other businesses in order to grow their own large supply of money.

When you as an entrepreneur hope to create something out of nothing, you will most likely need to find money to support that great idea to give you the necessary backing to succeed. One of my dear professors has reiterated several times to me the example of Hooter’s.

In order to own a hooters franchise you have to (or used to have to) have at least $3 million in liquid money in order to not only buy the franchise, furniture, food, staff, etc. but also to be able to survive for three years without making a dime.

This is why large franchises can grow and spread when it seems that they aren’t making any money, they are well supported financially from the start.

As an entrepreneur its imperative to recognize the opportunities that you have to receive funding. So now we’ll go back to sourcing. You need to build a network. Easier said then done, I know. However it starts with becoming a member of your local county’s chamber of commerce, for my county this was a $145.00 for the first year with an investment of $135.00 every year after that. Next you need to begin forming relationships with influential people in your community that know where the money is. Once you’ve gained the respect from these people, because you believe in your product or service and you are able to communicate that, they will be willing to help you expand your network of possible investors.

I hope this gives a basic overview of the process of sourcing for angel investing.