Category Archives: Entrepreneurship and Leaders

Original articles for entrepreneurs and small business

Investing In Private Companies

Private Equity Investing

With the ease of access to information, today it is much easier to gain the financial knowledge required for sound investments. Gone are the days when investment are only made through fancy brick, and mortar institutions and only the investment in public ventures are considered a safe and reliable investment option.

Nowadays it is equally safe and profitable to invest in a private company as it used to be in public enterprises.

With arising financial pressure to perform, complications and scandals relevant to public companies, some investors are of the view that private companies are more genuine and honest.

But before getting into the complexities, it is essential to know about the types of private companies today’s investors are participating.

Types of Private Companies

The type of a private company is defined by its development stage. First of all, comes the stage of angel investing or angel firm. At this point in time, the business is just starting. This stage is known as angel investing because the entrepreneur has arranged funds from his resources. The second stage is venture capital, at this point, it is assumed that business has long-term potential to some extent. Due to this fact, a relatively experienced group of people offer capital for the business along with knowledge regarding the operations and management of the business.

The next stage is known as the mezzanine stage, at this stage the business is introduced to the dynamics of the equity and debt and in case the company defaults on its interest payments, then it will also turn into equity.

Investing in Private Companies

While investing in a company, it is necessary to consider the stage or type of the private company, since each stage offers a different set of risks and rewards. Therefore, the investor should invest according to his risk and reward appetite.

Investing in an angel firm offers the highest amount of reward, but it also involves the greatest amount of risk. At this stage, the business is just getting started, and there is a substantial amount of risk it will not be successful, but if does, it can offer the highest possible amount of profit for the investor.

Many considerations are taken into account by the investor like the direction of that specific industry, management, and use of funds.

Now considering the second stage, that is venture capital stage. At this point, there are fewer chances that the business will fail because now a higher amount of capital and business knowledge is involved. This is also the relatively common option available for investing which also has the potential of reaping higher level of profits.

When the business is at the mezzanine stage, usually financial institutions jump in and support the business because at this level business is established to a great extent. Therefore, financial institutions see the window of opportunity and try to benefit from that. Though individual investors can also invest at this stage, businesses prefer financial institutions because they can sometimes offer a higher level of flexibility and/or better terms and conditions.

At the last stage, a company is equivalent to a public company. All of its functions are same as of a public company. This stage offers the least amount of risk, but this factor also reduces the level of rewards as well. But still, this is a great option for investment purposes.

Benefits of Investing in a Private Company

There are several benefits of investing in a private company, some of them are highlighted as follows:

In the past, it was believed that public enterprises perform better than private companies. This fact can be negated with the help of some recent data;

PE-private-equity001

This indicates that investing in private equity is a better bet compared to the investment made in a same publically traded company.

The trend of private corporations performing better than the public companies is more pronounced when considering the investment in lower and middle market private equity as indicated below:

lower and middle market private equity

This change of trend can be attributed to the fact that private companies are relatively young in nature and they are growing. Therefore, there are things that they have yet to explore or incorporate in their business. This allows them to generate the higher level of returns with the higher level of risk involved as well.

Secondly, private companies are more than likely to invest towards their growth and are more sensitive to the investment opportunity coming their way. These dynamics of the private company make them capable of providing a highest possible return on the investment.

Thirdly, more than likely a private company is a tightly run business. This kind of structure is very successful in the business arena because they have a perspective that is long-term. When business management has a clear and concise long-term plan then it is more than likely, that such company will outperform its other counterparts which are in public sector.

Doing what’s easy is not always the best direction with investment money. Nowadays investing in a private company is easy, but still not as easy as investing in a public company.

However, it is quickly becoming common practice by many high net worth investors to add private companies into their investment portfolio with the help of pooled investment options available in the market.

Investment in private companies through this method allows the investor to reap the same kind of benefits that are being offered by a mutual fund based on the public companies. Under this method, investors receive units, which is equivalent to owning shares of a publically traded company. Then using these units investors carry out their investment activities. In most of the cases, these pooled investment instruments are focused towards the companies which are in their earliest developmental stages. But there is no limitation to that; there are also well-established private companies are available for the investors who are risk-averse.

When investing in a private company, it provides the investor a certain kind of control and can give authority over the firm. This is referred as the control investing. Control investing provides the investor with the substantial amount of control that can be used for influencing management style, a way of doing business, operations of the business and many other aspects. This provides a better level of accountability in the business along with the value creation at the optimal level. There are some cases where control investing allows the investor even to have the authority to remove or change the CEO and management.

While conducting business, the risk mitigation factor is usually undervalued. This aspect is left to be on the need basis; this implies that its risk should be dealt with when it arises. This is an ultimate strategy for business failure because when risk arises, it is usually too late to deal with. The optimum strategy is to mitigate the risk before it even arises and there should be a concise and definite plan about how to deal with a risk when it arises. When the investors invest, then this aspect of the business was catered by them to a great extent. This is because, when investors’ money is at stake, they are on the lookout for the risk. They sense it before it arises and try to avoid it at all the possible cost. This phenomenon becomes all the more efficient and effective if the investment made by the investors provide them some kind of control and authority over the business. Therefore, it is also in the interest of the private companies to have some external investors because this allows them to run their business efficiently and effectively.

Things to Consider

There are certain things that any investor should keep in mind before investing in a private company.

First, private companies are relatively not liquid compared to public companies. Also, the investment horizon involved in investment with private companies is long-term. Therefore it is not possible for the investor to cash out of the business when he wants, but they have to wait for such event to take place. For example when a company goes public or when it buys its private shareholders or worst case scenario when another firm is purchasing the business. Moreover, an investor should also keep in mind that private companies are valued like any other security on a regular basis. This is to determine either the company is undervalued, overvalued or fairly valued.

All of these facts make investing in private enterprises a highly profitable game. Investors that have the financial muscle to deal with the risky and illiquid nature of a private growing company.

Follow on LinkedIn Rodney Gray

Reference:

http://www.investopedia.com/articles/basics/11/investing-in-private-companies.asp

http://www.marketwatch.com/story/how-to-invest-in-the-trump-era-buy-shares-of-private-companies-2017-01-31

http://www.newworldcapital.net/wp-content/uploads/2014/03/The-Pleasures-and-Perils-of-Private-Company-Investing-2-15-14.pdf

Disclaimer: The information provided on this page is for general informational purposes only and not to be considered investment advice. While we try to keep the information up-to-date and correct, there are no representations or warranties, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the information contained on QuilPen. Any use of this information is at your own risk.

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Marketing Tools for Nonprofits

Nonprofit organizations generally are master’s of marketing both online and off.

Most Nonprofit organizations marketing methods start with the basics and what fundamentally can produce a return-on-investment month after month.

Nonprofit organizations marketing methods

Challenges facing nonprofit business marketing.

The main goals of any nonprofit organization is to win supporters towards their cause, and to fundamentally convert those supporters to donors, members or customers to support the company.

Social Media

Social media marketing is a necessary foundations to any business but can get very costly to boost ads in a pay for performance marketing environment.

With this type of marketing ,from experience, more content with lower boost budgets tends to work best.

From experience, creating one ad and throwing a ton of money at it can taper off performance fairly quick. The best advice is to get creative and boost the $5 / $10 or $20 ads, this can work quite well and will force you to produce quality ads.

It’s always good to formulate your social media Foundation from a zero-cost perspective at first. Only adding money into boosted ads once your profile and message is clearly published.

Cost effective marketing

Marketing your website’s products and services can be a simple process, when using the proper tools.

The most important part for any business, expecially non profit is to have low-cost marketing that works.

Email list marketing works. With a newsletter type campaign you will only build your core marketing Foundation bigger and better with each successful campaign sent.

Email marketing has clearly proven to be one of the best-performing marketing tools available to date.

Nothing can beat the cost and control list marketing provides.

Inviting Atmosphere for the Disabled | Michael D Haines

Entrepreneurs making a difference and Changing the World.

A letter was written to Michael D Haines

Dear Michael: I challenged myself recently and landed myself a part-time job at a local Bottle Return-it facility. My doctor had told me for years that because of having been diagnosed with Bipolar Disorder, he said that I would never be able to return to the work force. I have proved him wrong and my new boss says that I’m just as
good as anyone else for the job. I’m fast and efficient for a 51 year old man.

I am very grateful to you for

“your advice to challenge myself. Thank you so much, Mike, for your inspiration. You’re a great man!” ~ James Tobin

View Mikes personal website: http://www.MichaelDHaines.com

Michael’s Mission Statement

I will help you as well your managers and their teams see the world from a totally different perspective. He shows them how to connect more meaningfully with an ever-growing demographic.

Michael D Haines
Michael D Haines Kelowna BC Canada.

Michael will give a brief run down on some stats from Statistics Canada on how consumers with challenges are growing to be a larger segment of your market. Michael also believes that if you alienate a person with a challenge in a given party, that party may consist of six other people. You have lost the chance to serve the other five people in that party as well. “Have you ever calculated the revenue of a customer?”

If you own a pub, that one customer might spend $200.00 per month, and you do the math over the year. Multiply that by six and you will have the kind of damage one untrained person could do to your business.

I have heard some pretty shocking things about customer revenues, and they can be vicious. Give a customer bad service or create a bad experience for him/her and they will tell 25 people about it. Remember our six patrons at your pub, well, if that holds true then you have lost a further one hundred and fifty people visiting your pub. And that is just because your staff was not properly trained in how to provide quality service.

WHY SHOULD BOOK MICHAEL?

Learn more;

THE DISABILITY FALLACY

Michael Haines

In my mind, I do not have a disability, however, society has placed a label on me, and many others, who were born with challenges.

We all have challenges.

Some are more pronounced than others, and I will go further to say that if you don’t have a challenge, you aren’t living the best life that you can live.

All human beings need challenges in order to grow and be better. I will show you how to leverage challenges to make your life or business the best it can be.

9 Ways to Promote your Products with Little to No Money | [VIDEO]

Here are 9 effective and inexpensive ways to market your product or service online and offline

Not only did I find it very interesting from a marketing stand point but I also believe that young entrepreneurs or small business owners will benefit from the information that he is sharing.

In order to have a successful company, It’s clear that a company needs to find ways to promote their products and or services on an ongoing basis (365/24/7)

You are just starting your small business or you already have a business but you are looking for ways to get your product or service in front of the right people.

You know you need to come up with a truly effective marketing strategy. And you know you can’t afford to spend a lot of money because you need to make some money before spending some on your business.

Original article source https://quilpen.com/2017/06/05/the-best-wa….

Martin Paquette

Special thanks to (Martin Paquette linkedIn) with Upside Videos be sure to follow them on YouTube.

Martin is an energetic and very talented young man. It was a great pleasure working with him.

 

 

Related Articles;

How to raise investor capital for small business

If you want to be your own boss then setting up a small business might be the solution, the idea sounds great, Right?  

But wait! Before you can get your business started very first thing you need is money..

If you don’t have enough startup capital, your idea might not make it to profitability and beyond.

In this article, we are proposing you some workable plans for getting investor capital for your small business. Let’s discuss all these plans in detail and push your startup into the right direction.

Start-up launch platforms

Sometimes information is the key element for getting investor capital when you’re about to start a new business, start-up launch platforms have been particularly designed for this purpose. You can get information, market research and investment ideas on such platforms.

The best thing about these communities is that they get you connected to the investors.

Companies like Gust and start.co are some of the most famous for this purpose when it comes to investor capital launch platforms; they help you in locating investors in a very efficient and simple way.

Your entire problem is solved once you get your investment plan so it’s the time to relax because start-up launch platforms are ready to do this for you.

Angel networks

All your plans and efforts for starting a new small business might be ruined if you lack the funds. This turns out be even more challenging when your own savings and help from family and friends is not enough. And typically never is.

What to do now? It seems you’re stuck in between, but an angel investor might just be able to help you out of this problem.

Angel investors are business individuals that provide start-up business loans or make a one-time investment to get your business established and help with things like marketing a business plan and direction.

Angel investors provide more favorable terms as compared to other investors in the market since their aim is to put your business on its legs rather than gaining profit from the business you are starting.

You must be thinking “great”  your problem is solved but to be honest, not yet!!

The most common problem associated with angel investors is to find them and then get yourself connected to these individuals for a solid financial partnership.

There is always a plan.

There are certain websites to help you in locating angel investors as they offer a directory listing by area and platform type so there you can easily spot your investor.

Incubators

This is the safest way you can get funding for startups, these days if you are educated so better make use of it,  incubators are very popular these days, they are mostly associated with universities, non-government organizations, and research institutes.

Once they find your business idea profitable or worth the venture, they are ready to jump in.

Looking for such incubators will cost you no more than few interactions to present your business details, and they provide resources to startups, including office space and mentoring services.

Why they are so eager to invest?

Well, it’s always about a deal; investors provide you what you need, money, in return for an equity stake in your business. In many cases restructuring or a refocus will be implemented.

Government business administration

Traditional methods for raising funds for your business can always be helpful, local governments are always keen to introduce programs those can stimulate the economy.

Crowdfunding Sites

Worried about investment issues in your business program? No need to worry about this now, just grab a cup of coffee and start searching for some fine crowd funding sites.

At these ever growing crowdfunding sites, you can find an investor sometimes rather easily as each of these funding sites has particular criteria for incentivizing investors to help you through your business goals.

Marketing/entrepreneurship news and original articles for business QuilPen.com

Disclaimer: The information provided on this page is for general informational purposes only and not to be considered investment advice. While we try to keep the information up-to-date and correct, there are no representations or warranties, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the information contained on QuilPen. Any use of this information is at your own risk.