Funding Your Early Education Company



Many of us need money from other people to start and grow companies. The money comes from banks, partners, investors, venture capitalists, equity funds... and/or our closest friends and family. No matter what the source is, understand two things. One, there is always a cost to using someone else's money. Two, the cost can vary greatly between sources.

The first question is... Do I borrow money and go into debt or do I sell equity in my company to someone else? Keep in mind that equity is always more expensive than debt. You only have to pay-off debt one time. The payments on equity can last the entire life of your company. I have seen more than one person sell his or her company only to realize just how expensive equity can be. One example, my friend (a very smart guy) started his company and gave away a 20% equity stake in exchange for $50,000 of start-up capital. Over approximately 10 years, this 20% partner received 20% of all of the company profits and $5,200,000 when the company was sold. If he paid interest of 50% a year on the $50,000, his total repayment would have been $300,000.

When it comes to growing a successful early education company, responsible use of debt can be great tool to expedite that growth. Here are some important things to consider when you're thinking about using debt.

1. Never accept a loan from any lender (including your favorite lender) without having many lenders compete for your loan. No matter how you approach the process, competition amongst vendors is always in the best interest of the consumer.

2. When you see the loan that you think is right for you, do a detailed review (this means use a good attorney) to make sure there are no hidden fees or terms... no ambiguous language that can surprise you after you have already made the commitment. Some people think it's overkill, but it's not. Many banks and bankers (like car salesman) take an approach that the paperwork is all just standard stuff... sign here... sign here. It's standard stuff because they're not the ones on hook. Review the loan documents carefully.

3. Be transparent with your lender. There's nothing wrong with negotiating the best terms you can get, but don't hide anything. Be honest and be direct.

4. If you can, see how the lender works with their borrowers when things aren't going well. Everyone is friendly the day you sign the papers, but I have seen lenders become absolutely vicious when they're getting tested. Never in recent history was that more apparent than in the financial system crash of 2008. You want a lender that will work with you just in case everything doesn't go as planned.

As always, we hope it helps.

(Legal Disclaimer: Always consult the proper professionals before taking action. By and before the use of the information provided herein, reader agrees that BFS® is not responsible for viewer's actions related to said information.)

Download our Free eBook and use our 20+ years of experience to make your early education company more profitable and more valuable. http://bfsinc.net/ebook/
 
Previous Post Next Post
  • How to Appreciate Your Life - Writing Your Own Eulogy

    Everyone has dreams and aspirations. This is what keeps them going. Will challenges on the way deviate you from reaching the destination? Have you ever thought what your eulogy would be like? Wouldn't you like to see yourself as a winner of all dreams, materializing them to your heart's c... Readmore

  • Learning More About the Terror Watch List

    What a terrorist watch list is The terrorist watch list is officially named the Terrorism Screening Database, which is run by the Terrorist Screening Center of the FBI. This database is the central repository of suspected, as well as known domestic and international terrorists of ... Readmore

  • Death of a Bank

    I keep a frog on my pencil with big goo-goo eyes — the frog, notthe pencil, that is. The head is mounted on a spring that boingsback and forth when I flick it with my finger. It makes me smileand is my favorite pencil thing. I got it at the closing of oneCameron banking office last fall. I was wor... Readmore

  • The Fax Machine

    His eyes closed, wearied from too much Wikipedia, and staring at a lonely inbox. As they did, the screensaver on the monitor on the desk kicked in, strobing enough light to alternately illuminate his inner eyelid with light blue and white. As his mind drifted along, Mark thought about how t... Readmore

  • Mexican Cooking And Cooking Equipment

    Tacos. Nachos. Taquitos. Burritos. Do the words mentioned above ring a bell? Well, if you are one of the millions of people around the world who love Mexican cooking, then the names (and tastes) of the dishes mentioned above are surely familiar to you and are enough to bring hunger pang... Readmore

  • Why Donald Trump and Hillary Clinton MUST Read This Book

    E. Dennis Brod, the philosopher and author of The Essence of Ethical Pragmatism (the common sense philosophy), has issued a challenge to Hillary Clinton and Donald Trump. The recently published book, lauded as being non-partisan and impartial, explains the philosophy of ethical pragmatis... Readmore

  • The Muslims in India are Blackmailing The Indian Majority in the Name of Cow Slaughter.

    The Muslims are never happy anywhere in the world and more so in Islamic countries. They always find out innovative ways to invent stories of atrocities on them and start destabilizing wherever they are in minority. Throughout the world Muslims never place country before the religion, it's a... Readmore

  • Key to Success in NDA Entrance With DCG

     Career in Defence is interesting and challenging. Several ofStudents wants to make their career even after 12th, So NDA isthe best option for them. NDA exam is also considered as toughexam among the entire competitive exam. Candidates need to workhard with proper guidance. Thousands of stude... Readmore

  • Sociology Term Papers

    Are you searching for an online writing company which gives you the assurance that it offers high quality sociology papers? A company which has highly competent sociology papers writers and a company which upholds the student’s privacy? Then be sure that you are at the right track. This is the co... Readmore

  • A Brief Insight Within the Realm of Movie Theaters

    People have been going out to the theater to see movies for decades. It is a novel idea that has appeared to stand the tests of time even as our methodology of conducting our everyday lives has changed drastically, the urge to go to the movie theater is still very present. As an em... Readmore