Venture Capital Infusion vs Business Loans

As soon as you say the words business loan, the assumption is a negative one.  However if you say Venture Capital infusion then its far more positive.  But is this true?

Let's examine the main differences
With VC money you will lose power to make decisions and overall earning potential from you business
A loan will cost you a percentage of your profits in the short term, BUT you will not relinquish control of the decisions made and you retain all equity of your business.

Why do you need this money?  If it is strictly to obtain more inventory that you will sell with in a short period (lets say 90 days) then your probably better off taking a loan.  Yes your margins will be less and at times minimal but there is value to selling inventory even if your profits are not maximized right away.  By being able to sell more inventory you will most likely increase your overall customer base.  If you product or service is one that will bring back repeat business then this is extremely valuable.  The average business can see a customer return 3-4 times per year.  In addition to the repeat business there are also referral business you can receive from those new clients.

Now if you took VC money and your business grows but you are now sharing revenue then you have really cut into your profits but with the loan you will reap the rewards, maybe not so much the first time around but after that you will be thankful you chose not to bring in VC money.

Bottom line unless the VC money is bringing something to the table like a large customer base and or a certain skill or service that you can't replicate then a loan is most likely the smarter decision.

So lets revisit the ASSUMPTION that VC money is  positive and a loan is negative.  In this particular example that assumption could not be further from the truth!

For more information about getting money to grow your business please contact me at businessfastcash@gmail.com