The Secret to Business Success: Other People’s Money (OPM)
By Ambrose Moses, III
OhioMBE – May 15, 2014
Other people’s money (OPM) is a reality and necessity of business life. OPM comes in two basic forms — Capital and Revenue.
Capital comes from investments or loans that your business receives from its owners, investors, or lenders. For example, as capital, OPM is the $5,000 that your mother gave you to start your business, the $10,000 your college roommate invested into your expansion, or the $25,000 you raised through an equity crowdfunding campaign.
Revenue is the money your company receives from customers in exchange for the company’s goods or services. For example, as revenue, OPM is the $5,000 in sales your company earned last week, the $10,000 in Internet-based sales you generated last month, or the $25,000 in pre-sales you generated through a rewards-based crowdfunding campaign.
Was crowdfunding just used both to raise capital and to generate revenue? If you haven’t already, maybe you should research a bit about crowdfunding and how it can be used by businesses like yours. (Hint: Yes, it can.)
Ideally, the business owner would prefer to have OPM as revenue. However, OPM as capital is often needed in order to build and sustain the business until sufficient sales are made. The long and short of it is that other people’s money (OPM) is a reality and necessity of business life.
If your business receives no OPM, it will have a short lifespan. In a future article, we will discuss whether your business is suitable or ready to receive OPM and what you need to do to make it suitable and ready.
For more information contact Ambrose Moses, III, an attorney with Moses Law Office. Email: info@MosesLaw.pro. Telephone: (614) 418-7898.
