Entrepreneurs looking for investment funds often look to venture capitalists or angel investors, but the Wall Street Journal says that a small business owner’s first investors may be family or friends.
The newspaper says that entrepreneurs often turn to their parents or a former boss for help when they are forming a company. Friends and relatives may not ask difficult business questions, and they are already emotionally invested in the success of the business. A former boss can be a valuable ally because they already know an entrepreneur’s skills and talents, but they will also likely have a few ideas of their own on how to run the company.
The Journal says other possible sources of investment are a business owner’s suppliers and distributors. While their funding may come with various conditions, they are directly tied to the company’s success and will gain additional benefits from an increase in sales.
Emerging companies are seeing renewed growth as the economy recovers. A recent Intuit study found that small businesses added approximately 25,000 new jobs in May, and have added 240,000 new jobs since October 2009.
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