New Venture Lab: Equipping Christian Entrepreneurs

Raising Money for a Services Business

Question

I am planning on launching a home services business and need to raise $50,000 to fund the business.  The uses for the money include a professionally-designed logo, marketing materials, a killer website and a new truck with the company's name and logo painted on it to present an overall professional appearance since I plan on serving high-end homes and homeowners.  Can you help me raise the money or please point me in the right direction?

Answer

First of all, we applaud you for your desire and intention to start you own business, but we would not recommend that you attempt to raise any capital for the business as you suggested.  Since you did not mention needing any capital to buy tools, we are assuming you already have the tools necessary for your home services business.  Most services businesses do not require any investment at all since most of the expense is the owner/operator's time and there is little needed business infrastructure to be invested in.

In terms of projecting a professional image and raising money to fund the efforts to do so, we would suggest that your work reputation and character will shine much more clearly in the customer's eyes than a new truck or a snazzy business card or brochure.  If you show up on time, serve the customer well and charge them a fair price, you will out perform most of your competitors and most of your business will likely come in the form of repeat business and customer referrals.

In terms of raising capital, it is a very difficult proposition, it takes a lot of time and it is expensive (lawyer's fees, broker's fees, etc.).  Raising capital from an investor is also a lot like taking on debt: you have a stewardship burden to your investor, you give up significant control and ownership, your investor will have preferential liquidation provisions and will most likely require annual dividends.

We would suggest that you focus on landing the first customer or two rather than focusing on raising money.  That way, over time, you can finance your own upgrades to your business image.


kathryn marion October 31, 2008

If you still want to create professional-looking business cards, brochures, or flyers, I would recommend spending as little as possible on them, but getting the biggest 'bang' for each buck.

One way to do that is to post your graphic design project on Freelance.com, where freelancers will bid on the work.

Another way is to have a design contest on 99designs.com. There, you have graphic designers showing you their proposed designs upfront and you select a 'winner' and pay them what you stated up-front as the 'prize.'

Both are low-cost and low-risk ways of potentially getting high-quality design work done.

I wish you the best in your new business!

Brad Inge December 20, 2008

I am a service business owner who started just the way the previous comment suggests. In addition to avoiding all the baggage and stress created by investors, you will also gain valuable knowledge and skills as you climb the service industry ladder one rung at a time. For many years of running my business, I could have made more working for someone else. That was the price I paid for the education and experience. Now the investment has paid off. In addition to the money I make, I have training and knowlege that I carry with me.

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