I have an aquaponic greenhouse selling pesticide free produce. The demand is great in fact everyone says we should put up a 2nd greenhouse . We have been approached by a couple of people who want to invest, I'm not sure about what all the pros and cons are with dealing with investors or how to proceed or would my best bet be to wait till my finances allow? Any thoughts or comments would be greatly appreciated
Seriously though, you are wise to proceed slowly with taking on outside investors. I would recommend doing the following before you even begin negotiating with any prospective investors:
--Sit with yourself and/or all your existing partners in the venture and articulate, VERY CLEARLY, what your values are.
--Write up a formal values statement, and a set of operating principles.
--Define success, in terms of how big the business will be, how quickly it will grow, what your impacts will be on your various stakeholders, who will benefit financially, etc etc etc.
Once you have spent some time with the above, it will be much easier to determine whether you want to expand at all, much less whether any would-be investors might share your vision.
I would add to what Elizabeth said with...would you be happy to have someone else call the shots on your business? When you use other people's money they will undoubtedly have a lot to say as to how you run your business. If you are not working hard enough in their eyes you will hear about it. If you are not making enough of a profit, you will hear about it. If you take a vacation, you will most likely get questioned as to why you were gone and why you felt you could spend the money to do so.
If you open another greenhouse will you need employees? Are you ok with being the boss? There are a lot of taxes and regulations involved when you have employees. Could you handle things if the employees leave unexpectedly? Can you handle any costs involved if any employee were to steal from you?
Many people love the idea of expanding but when it is all done find it is much more work and a lot less money. We had a thriving trucking business and wanted to expand. We purchased 2 more trucks. One employee disappeared in Nevada with the rig and it took 2 months to track it down. We lost the future business from the company we hauled for and had to pay 2 months worth of impound fees in order to get the rig back. The other employee thought he wanted to be a long haul trucker until he found a girlfriend. Now he wanted to be home every night. He found a new job with no notice which left us sitting idle while assuming the $1200 monthly payment and $430 monthly insurance cost. It almost ruined us. We learned a lesson and sold off the 2 extra trucks. We made much more money once that debt was gone and were a lot happier in the long run.
You need to determine what risks you can handle. Are your investors willing to help work at the new greenhouse? Maybe get them involved in where you are now so they can determine if something happened to you if they would be willing to take over the new greenhouse to save their investments. Some questions and things to think about.
I've learned the hard way never to bring in investors after the project has been operating.
If it was such an awesome idea, they should have gotten in on the ground floor. If they waited until the project was successful, they have effectively transferred the risk onto your shoulders and are now showing up to reap the rewards.
If you must take on investors, use them as a source to borrow money. Offer them a reasonable rate of return.
You get the use of the cash, they make a little, you maintain full control and dont sacrifice a huge future for a short term gain.
If an business is successful enough to attract investors, why would you need them?
Such a successful business would be able to expand on its own.
Seed the Mind, Harvest Ideas.
posted 4 years ago
Thanks for all of the input, seems that deep down feeling that I have is correct. The influx of cash seemed easy but sounds like it carries too high a price. Thanks again for all of the responces. I'm enjoying this web site more and more