Crowdfunding Update: Y’all Ain’t Ready!
By Ambrose Moses, III
OhioMBE – June 1, 2014
We are still waiting for the U.S. Securities and Exchange Commission (“SEC”) to issue the final rules that will allow small businesses to raise capital through investments from the general public via crowdfunding.
However, if the final rules were released tomorrow, most of the small businesses that are in need of capital to sustain their operations and grow would not be ready to take advantage of the opportunity.
Here are a few of the reasons why “Y’all ain’t ready!”:
- Your LLC or corporation is not complete. You don’t have the documentation to evidence the existence, the ownership, and the decisions of your company. This is important because investors (and the law) will require that you disclose such documentation. No one wants to invest in a company that can’t even prove it is valid under state law.
- You don’t have an updated business plan. Whether you are a startup or an existing business, you need a business plan to communicate to investors what the company does, how much it needs, and what it will do with the capital it raises. No one wants to invest in a company that has no viable plan. Would you?
- You don’t know what crowdfunding is. You may have heard the word crowdfunding here and there, but have you taken the time to research and ask questions? You will not be able to take advantage of the opportunity if you don’t know about it or understand it.
- You don’t have an email list of your contacts and network. One of the keys to crowdfunding is having “a crowd”. This would be your network of friends, family, contacts, customers, clients, etc. You may have some of them in your cell phone or in your email account. But, have you gathered all of your contacts and created an email list that you can use to send out newsletters and information to people who care about you and your business? If you don’t have a crowd, you can’t crowdfund.
There’s more, but, if you get these four items taken care of, you will be better prepared to take advantage of and benefit from crowdfunding, now and when the new rules are issued.
For more information on Crowdfunding, contact the Ohio Business Development Center at www.OhioBDC.com
