Finding Funding
By the Family Entertainment Center
Page 1, 2
These days you are very excited as you key in on your
new business idea. It's a great business to be involved with, it's family
friendly, community enhancing and potentially very profitable. It's not
yet available in your town or just not being done as good as it could
be, if you were to do it yourself.
You have taken the time to do a little bit of research, found some equipment
providers and maybe even taken a quick look at your local market opportunity
through your community demographics.
Your thinking it may work and are looking to take the next step in pulling
together what you need in terms of a completed business plan so you can
get out there an present your idea to potential funders. Good for you.
But that's the good news. Unless you have
$50,000 - $100,000+ in cash and/or equity the number one challenge you
face is finding your funding. How are you going to raise the capital you
will need to build and operate a family fun center? Your number one challenge
is that this is a 'retail' venture. You are providing a service for people
within your community who come to your facility and pay a fee in exchange
for a favorable family experience.
Unlike new technology that allows you to speak Spanish to your computer, your market value is in the experience you provide your
guests, and outside of your capital assets (property and equipment) is
very much an intangible asset. Investors like Venture Capital firms, Investment
Bankers and Angel Investors are typically looking for an asset that has
a tangible value and can be patented which could hold a lot of future
potential for it's investors and would work to protect the investor should
the business partners go under.
Unfortunately, because of this and in terms of return on investment (ROI)
many funders, including the above are not typically interested in a retail
venture. That leaves you with a few choices;
Traditional Funders
Bankers are traditional funders. It is their job to loan money to qualified
people and investment opportunities that will drive a profitable return
to the bank. These folks are responsible for the banks funds and for making
money off the funds if loaned. Most traditional funders want the entrepreneur(s)
to be fully invested in their business projects. Meaning that your banker
wants to see a comfortable level of commitment from you and your team
before they are going to be interested in loaning you any of their funds.
This level of commitment varies from 20% - 40% of the total funds required.
This means that if you determine from your business plan that to realize
your project goals you need to raise $300,000 dollars, the traditional
funder will expect you and your partners to bring from $60,000 to $120,000
to the project yourself.
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